Bank Reconciliation Statement Test - 5

Cash book only records cash transactions that is cash received or paid. It does not record any credit transaction. Thus above statement is false. We have separate subsidiary books to record credit transactions.

Contra entry means in which the same ledger is debited as well as credited but in separate columns of cash book. So when we deposit cash in the bank both cash and bank gets affected and thus it is a contra entry. and when cash is withdrwan from bank it is assumed to withdrwan for office use unless otherwise mentioned and thus will have affect on both cash and bank. So both the entries are contra entries.

When a cheque is received and not further information is given either alongwith the cheque received or on subsequent date about its deposit into bank, it will be assumed that the cheque is depsoited into the bank on the same day when it is received. hence directly bank A/c will be debited to Customer's account.

Head cashier gives the money in the beginning of the period to the petty cashier and then reimburses the amount actually spent  by the petty cashier. Therefore the above statement is false. Head cashier is not given the money , petty cashier is given the money and that too in the beginning.

debit balance means the firm has to take the money and credit balance means the firm has to repay the money. therefore debit balance of personal account is debtor and credit balance is creditor.

Trial balance is not used for calculating profit it is just used to check accuracy, preparing final accounts and checking balances of ledger. For calculation of profit Tading & Profit & Loss A/c is made.

The difference between the pass book and cash book will arise from timimg, delay in advice, errors and omissions. whihc may occur from the point of view of cashier of the bank which might lead to difference in the two.

There is a time gap in recording the transactions inthe cash book and the pass book.Eg: Cheques depsited but dishonured by th ebank in which the cash book is already credited with the amount but cheque has not cleared so bank balance will not increase, Bank interest received by the customer or charged by the bank on certain services will not be known to the customer. he will not pass the same entry in his cas book. Thus these are timimg differences which occur.

It may be in form of wrong credits and debits made by the bank in the customer's account and certian direct depsoites received and payments made which are not recorded in the cash book but passed in the pass book.

There are certain errors and omissions which might occur and the balances in the bank pass book and bank column cash book will not tally therefore we prepare bank reconcialiation statement.