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Bank Reconciliation Statement Test - 29

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Bank Reconciliation Statement Test - 29
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  • Question 1
    1 / -0
    Difference in balance as per pass book and balance as per cash book due to ______ is termed as difference arising due to errors in recording the transaction.
    Solution
    It is generally experienced that when a comparison is made between the bank balance as shown in the firm's cash book, the two balances do not tally. Hence, we have to first ascertain the causes of difference thereof and the reflect them in a statement called Bank Reconciliation Statement to reconcile (tally) the two balance. Reconciliation of cash book and the bank passbook balances amounts to an explanation of differences between them. The differences between the cash book and bank passbook is caused by:
    a. timing differences on recording of the transactions.
    b. errors made by the business or by the bank.
    Sometimes the difference between the two balances may be accounted for by an error on the part of the bank or an error in the cash book of the business. This causes the difference between the bank balance shown by the cash book and the balance shown by the bank statement. Difference in balance as per pass book and balance as per cash book due to omission in cash book, omission in pass book and wrong posting in cash/[pass book are termed as difference arsing due to errors in recording the transaction.
  • Question 2
    1 / -0
    Which one of these is not a cause of difference in balance as per pass book and as per cash book?
    Solution
    Reconciliation of cash book and the bank passbook balance amounts to an explanation of differences between them. The difference between the cash book and the bank passbook is caused by:
    (a) Timing Differences: It includes cheques issued by the bank but not presented for payment, direct debits made by the bank on behalf of the customer, etc.
    (b) Differences caused by errors: It includes errors committed in recording transaction by the firm, errors committed in recording transaction by the bank.
    Cash deposited and cleared is not a cause of difference in balances as per pass book and as per cash book.
  • Question 3
    1 / -0
    Difference in balance as per pass book and balance as per cash book due to _____________ is termed as difference arising due to errors in recording the transaction and not a timing difference.
    Solution
    Many times the balance as per the bank pass book and the balance as per the cash book do not match. The differences between the cash book and the bank passbook is caused by:
    a. timing differences on recording of the transaction: When a business compare the balances of its cash book with the balance shown by the bank passbook, there is often a difference, which is caused by the time gap in recording the transactions relating either to payments or receipts. The factors affecting time gap includes cheques  issued by the bank but bot presented for payment, cheques paid into the bank but not yet collected, direct debits made by the bank on behalf of the customer, amounts directly deposited in the bank account etc.
    b. errors made by the business or by the bank: These are the errors which are not caused on account of any timing difference. Overcasting,under casting  of bank passbook or omission in cash book is not a factor termed as timing difference.
  • Question 4
    1 / -0
    Difference in balance as per pass book and balance as per cash book due to ________ is not termed as timing difference.
    Solution
    Many times the balance as per the bank pass book and the balance as per the cash book do not match. The differences between the cash book and the bank passbook is caused by:
    a. timing differences on recording of the transaction: When a business compare the balances of its cash book with the balance shown by the bank passbook, there is often a difference, which is caused by the time gap in recording the transactions relating either to payments or receipts. The factors affecting time gap includes cheques  issued by the bank but bot presented for payment, cheques paid into the bank but not yet collected, direct debits made by the bank on behalf of the customer, amounts directly deposited in the bank account etc.
    b. errors made by the business or by the bank: These are the errors which are not caused on account of any timing difference. Overcasting or under casting  of bank passbook is not a factor termed as timing difference.
  • Question 5
    1 / -0
    Mr. $$Y$$ presented three cheques of $$Rs. 3,000, Rs. 4,500$$ and $$Rs. 3,600$$ with the bank on $$28th\ March, 2014$$. Out of these cheques amounting to $$Rs. 4,500$$ and $$Rs. 3,000$$ were shown in the pass book in the month of April $$2014$$. While reconciling the balance on $$31-03-2014$$ which of these cheques would be taken in reconciliation.
    Solution
    In the present case cheque amounting to $$Rs. 3000$$ has been cleared in the month of March 2014 and whereas the remaining two cheques of $$Rs.4500$$ and $$Rs.3600$$ were showed in the pass book in the month of April 2014 which means they were cleared in April. But Mr. Y would have made the entries pertaining to all the three cheques in the month of March itself. And so while reconciling the balance as on $$31-03-2014$$ the two cheques of $$Rs. 4500$$ and $$Rs. 3000$$ would be considered for adjustments.
  • Question 6
    1 / -0
    If we take balance as per pass book, ___________ will be deducted to get balance as per cash book.
    Solution
    • If balance as per pass book is the starting point then, to reach balance as per cash book interest given by bank would have to be deducted, as this entry has been recorded in the pass book but not in the cash book and the later would show a lower balance.
    • In case of interest charged by bank and cheque deposited but not cleared  the amount would have to be added to the passbook, whereas in case of payments made by bank under standing instructions the entry would be recorded in both the pass book and cash book as it is pre determined and so no adjustment would be required in this case.
  • Question 7
    1 / -0
    Mr. A issued cheques worth Rs. 10,000 in March 2014 out of which cheque worth Rs. 7,000 only were presented for payment by 31st March, 2014. While reconciling bank and cash book balance as on 31st March, 2014, how much would be added to balance as per cash book to arrive at balance as per Pass book 
    Solution
    A issued total cheque of Rs. 10,000 in March 2014 but CHeques amounting to Rs. 7000 only presented by the 31 March 2014. As cheque for 3000 was not presented, therefore, only 3000 will be added to the cash book at the time of bank reconciliation.
  • Question 8
    1 / -0
    Mr. X issued cheques worth $$Rs. 15,000$$ in March $$2014$$ out of which cheques worth $$Rs. 10,000$$ only were presented for payment by $$31st\ March, 2014$$. While reconiling bank and cash book balance as on $$31st\ March, 2014$$, how much would be added to balance as per cash book to arrive at balance as per Pass book.
    Solution
    Cheques issued by Mr. X is for $$Rs. 15000$$, so the cash book would be credited by this amount and for the same amount the passbook would be debited only if the cheques are presented for payment. But in the present case cheques worth $$Rs. 5000$$ were not presented for payment by $$31 st March , 2014$$  due to which the passbook balance would higher than the cash book by $$Rs. 5000$$. 
    So $$Rs. 5000$$ would have to added to the cash book to arrive at balance as per pass book.
  • Question 9
    1 / -0
    Mr. X had two accounts, one current account and another saving bank A/c in a nationalized bank. He drew a cheque of $$Rs. 5,000$$ on saving bank but credited to Current A/c in his cash book. Similarly a cheque of $$Rs. 2,000$$ deposited in current A/c was debited to Saving Bank A/c. What would be effect of these errors in Bank pass books/ Bank statement of these two A/cs?
    Solution
    • A cheque of $$Rs. 5000$$ was wrongly credited to current a/c. in the cash instead of savings a/c. so the pass book balance of savings account would be less by $$Rs. 5000$$ and the current account pass book balance would be more by $$Rs. 5000$$.
    • Now, in case of second cheque of $$Rs. 2000$$ it, was deposited in current a/c. but was debited to savings a/c. so, the pass book balance of savings a/c. would be more by $$Rs. 2000$$ and the current a/c. balnce in the pass book would be less by $$Rs. 2000$$
    • So , net effect of both these errors would be that the current a/c balance would be more by $$Rs. 3000$$ and the savings a/c. balance would be less by $$Rs. 3000$$
  • Question 10
    1 / -0
    Which of the following are the salient features of bank reconciliation statement?
    Solution
    Bank reconciliation statement is prepared to reconcile the balances as per cash book (bank balance) and pass book (bank statement) by identifying the causes of differences between the two. So, in other words, any undue delay in the clearance of the cheque will be shown. If any fraud is happening, it will show up when the balances would not match. And, it will also help us arrive at the actual position of the bank balance.
    So (a), (b) and (c).
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