Bank Reconciliation Statement Test

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Bank Reconciliation Statement Test - 23

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Weekly Quiz Competition

Question 1
1 / -0

The purpose of preparing a Bank Reconciliation Statement is to ___________.

A
Ascertain the difference between the pass book balance and the bank statement balance

B
Correct errors in the cash book or errors in the bank statement

C
Amend the balance of the bank statement of the firm

D
Amend the balance of the cash book of the firm

Solution

A bank reconciliation statement is a vital statement for the business.
It is prepared to reconcile the balance as per the bank pass book and the bank column of cash book. The balance as per bank column of cash book of the business does not contain all the entries and hence with the help of bank statement provided by the bank, all the errors are rectified. This gives a true picture of the balance available with the business.
Question 2
1 / -0

Bank reconciliation sometimes points to the need for adjusting entries. Invariably how should it be done?

A
The reconciliation of the ending balance as per the bank statement to the adjusted cash balance.

B
The reconciliation of the cash balance as per the company records to the adjusted cash balance.

C
Both a and b

D
None of the above

Solution

Bank statement provides balance as on date. But to determine the exact balance available with the business, it is required for business to prepare bank reconciliation statement while making adjustments in the bank column of cash book.
Question 3
1 / -0

The proper treatment on the bank reconciliation of an NSF cheque of a customer that is returned with the bank statement is to show it as a(an) _________.

A
addition per book balance of cash

B
deduction per book balance of cash

C
addition per bank statement balance

D
deduction per bank statement balance

Solution

A cheque is marked as 'NSF' when it is issued by the business to a supplier or creditors, but there are 'Not sufficient funds' in the bank account to make the payment. So, the proper treatment on bank reconciliation of an NSF cheque that is returned with the bank statement is to show it as a deduction per book balance of cash as it was added before when it was received for payment from the customer.
Question 4
1 / -0

In case of an enterprise having an overdraft facility, the bank reconciliation statement treats all the cheques deposited but not cleared in the cash book to be ________.

A
Added

B
Deducted

C
To be revealed only in pass book

D
To be revealed only in cash book

Solution

Cheques deposited but not cleared are those cheques which have been received by the customer and deposited into the bank for collection.
This will result in debiting the cash book, thereby increasing the balance of the cash book (bank column). However, the bank will give the same effect, i.e. increase the balance in the bank account only when the cheque is cleared. This is not affected by the fact that the enterprise has an overdraft facility at the bank or not.
Thus, in case of an enterprise having an overdraft facility the bank reconciliation statement treats all the cheques deposited but not cleared as added.
Question 5
1 / -0

Which of the following error results in unadjusted cash book balance?

A
Outstanding cheques

B
Unpresented cheques

C
Deposit in transit

D
Omission of Bank charges

Solution

An unadjusted cash book balance is such balance in which the items only accounted in pass book have not been adjusted yet.
Omission of bank charges results in unadjusted cash book balance as it has already been accounted in the pass book but not in the cash book.
Question 6
1 / -0

Collection charges and incidental charges are first reflected in ___________.

A
Pass book

B
Cask book

C
Bank Statement

D
None of the above

Solution

A bank determines collection charges/ incidental charges/ other miscellaneous charges as per the transactions undertaken between the account holder and the bank which is dependent on various factors like volume of transactions, availability of any service,etc. hence they are first reflected in the bank pass book and not the cash book maintained by the business.
Question 7
1 / -0

What is true about a reconciliation Statement? It is a statement _________.

A
Sent by the bank when we have made and error

B
Sent by the bank when we the account is overdrawn

C
Drawn up by the bank to verify the cash book

D
Drawn up by us to verify our cash book balance with the bank statement balance

Solution

Bank does not send any statement like a 'reconciliation statement' but only provides a 'bank statement'/ 'bank pass book' which gives us the details of transactions undertaken during the period. In fact, bank reconciliation statement is prepared by the business, only to verify the balance as per bank column of cash book and bank statement.It is an important statement for the business.
Question 8
1 / -0

The proper treatment on the bank reconciliation of a note collected by the bank for the depositor is to show it as an __________.

A
Addition per Book Balance of Cash

B
Deduction per Book Balance of Cash

C
Addition per Bank Statement Balance

D
Deduction per Bank Statement Balance

Solution

The credit note or note collected by the bank for the depositor implies that the balance in the passbook is being increased for reasons other than deposits. So, the proper treatment on the bank reconciliation of a note collected by the bank for the depositor is to show it as an addition per book balance of cash.
Question 9
1 / -0

Bank reconciliation statement is prepared by _________.

A
Accountant of the business

B
Manager of the business

C
Controller of the bank

D
Accountant of the bank

Solution

A bank reconciliation statement is prepared to reconcile the balnaces as per cash book (bank column) with the balances as per pass book (bank statement).
It is done by the accountant of the business as it is the business which needs to find the causes of differences between the two balances in order to present a true and fair view of it's financial statements and books of accounts to it's various stakeholders.
Question 10
1 / -0

Bank reconciliation statement is the comparison of the bank statement with _______.

A
Cash receipt journal

B
Cash payment journal

C
Cash book

D
Financial statements
Solution
To reconcile means to find out the differences if any between two or more things and eliminate it. Now, in case of any banking transactions for each deposit or withdrawal the entry is recorded at two places.
The pass book maintained by the bank and
The cash book maintained by the account holder.
These two books are opposites of each other which means if one shows credit balance then the other would reflect a debit balance of the exact same amount. But due to reasons like timing differences the balances of both these books do not match.
So, to reconcile the same a bank reconciliation statement is prepared. The aim while preparing a bank reconciliation statement is to take either pass book or cash book balance as the starting point, to add or deduct certain entries and reach the balance of the other book ie, if cash book balance is the starting point then after reconciling we should reach at pass book balance.

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Re-Attempt Weekly Quiz Competition

Bank Reconciliation Statement Test - 23

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Bank Reconciliation Statement Test - 23

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SHARING IS CARING

Question 1

Ascertain the difference between the pass book balance and the bank statement balance

Correct errors in the cash book or errors in the bank statement

Amend the balance of the bank statement of the firm

Amend the balance of the cash book of the firm

Solution

Question 2

The reconciliation of the ending balance as per the bank statement to the adjusted cash balance.

The reconciliation of the cash balance as per the company records to the adjusted cash balance.

Both a and b

None of the above

Solution

Question 3

addition per book balance of cash

deduction per book balance of cash

addition per bank statement balance

deduction per bank statement balance

Solution

Question 4

Added

Deducted

To be revealed only in pass book

To be revealed only in cash book

Solution

Question 5

Outstanding cheques

Unpresented cheques

Deposit in transit

Omission of Bank charges

Solution

Question 6

Pass book

Cask book

Bank Statement

None of the above

Solution

Question 7

Sent by the bank when we have made and error

Sent by the bank when we the account is overdrawn

Drawn up by the bank to verify the cash book

Drawn up by us to verify our cash book balance with the bank statement balance

Solution

Question 8

Addition per Book Balance of Cash

Deduction per Book Balance of Cash

Addition per Bank Statement Balance

Deduction per Bank Statement Balance

Solution

Question 9

Accountant of the business

Manager of the business

Controller of the bank

Accountant of the bank

Solution

Question 10

Cash receipt journal

Cash payment journal

Cash book

Financial statements

Solution

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