Bank Reconciliation Statement Test - 3

As the owner invests personal cash in the business, cash which comes on asset side increases and capital i.e. equity also increases as owner's investment in the business increase.

There may be certain transactions which may not show the in bank pass book or cash book bank column such as cheques deposited into the bank but not yet collected, cheques issued but not yet presented for payment, bank charges debited by the bank, etc, whihc will lead to difference in the balance of the two. so a schedule called Bank Reconcialiation statement is prepared in order to match the two.

It is a account which is a part of double entry system. The total of purchases account is shown in the Trading account and transferred to trial balance.

When Assets increases , we debit the said asset account.

When goods are distributed as samples it is the promotion and advertisement of the product of the firm, so advertisement which is an expense is debited as it is increasing and our purchase account is reducing as stock reduces from the firm so we credit purchase account.

cash book is a subsidairy book as it is prepared to record entries related to cash transactions. Those transactions are not recorded in the journal book that is why cash book is called subsidiary book.

Only cash transactions are recorded in the cash book. Non-cash aspect of transaction is not recorerded in the cash book, i.e. credit trasnaction it is recorded in other books

As different subsidiary books are maitained it becomes conveninet in handling and maintaining the books. and thus the above option is not the advantage of subsidiary book.

The debit note issued to the supplier indicates the supplier that his account has been debited in the books of the firm., as his account balance is reducing.

The business have both cash and bank related transactions and thus they prepare double column cash book in which cash transaction is recorded in cash column and bank transactions are recorded in the bank column.