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CBSE Questions for Class 10 Elements Of Book Keeping And Accountancy Bank Reconciliation Statement Quiz 6 - MCQExams.com
CBSE
Class 10 Elements Of Book Keeping And Accountancy
Bank Reconciliation Statement
Quiz 6
What is true about a reconciliation Statement? It is a statement _________.
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Sent by the bank when we have made and error
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Sent by the bank when we the account is overdrawn
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Drawn up by the bank to verify the cash book
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Drawn up by us to verify our cash book balance with the bank statement balance
Explanation
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.
How would deposits in transit be handled when reconciling the ending cash balance as per the bank statement to the bank balance as per cash book?
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Added to the balance as per the bank statement.
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Subtracted from the balance as per the bank statement
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Added to the balance as per company records.
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Ignored.
Explanation
In case of deposits in transit the entry would have been entered in the cash book and so the cash book balance would be higher than the bank statement balance
Therefore, while preparing a bank reconciliation statement if balance as per bank statement is the starting point, deposits in transit are added.
Bank reconciliation statement is prepared by _________.
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Accountant of the business
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Manager of the business
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Controller of the bank
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Accountant of the bank
Explanation
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.
The purpose of preparing a Bank Reconciliation Statement is to ___________.
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Ascertain the difference between the pass book balance and the bank statement balance
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Correct errors in the cash book or errors in the bank statement
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Amend the balance of the bank statement of the firm
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Amend the balance of the cash book of the firm
Explanation
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.
Bank reconciliation sometimes points to the need for adjusting entries. Invariably how should it be done?
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The reconciliation of the ending balance as per the bank statement to the adjusted cash balance.
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The reconciliation of the cash balance as per the company records to the adjusted cash balance.
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Both a and b
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None of the above
Explanation
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.
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) _________.
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addition per book balance of cash
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deduction per book balance of cash
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addition per bank statement balance
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deduction per bank statement balance
Explanation
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.
A discount of Rs 2000 was given to a supplier on his prompt repayment of debt but the cashier did not enter in the cash book. What should be the adjustment in cash to work out the correct balance of cash book?
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Rs 2000 will be debited in cash book
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Rs 2000 will be credited in cash book
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Rs 4000 will be debited in cash book
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Rs 4000 will be credited in the cash book
Explanation
A discount of Rs. 2000 given to the supplier on his prompt repayment of debt will reduce the amount of cash that the business will receive by Rs. 2000. A reduction in cash received is equivalent to the situation when cash goes out. So, Rs. 2000 will be credited in cash book as cash book is debited when cash comes in and credited when cash goes out.
Bank reconciliation statement is prepared on________________.
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yearly basis from Jan to December
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certain period basis
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as on particular date
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both a & b
Explanation
Bank reconciliation statement is a statement prepared by the business to reconcile the differences between the balances as per cash book and pass book on periodic basis. Generally it is done on monthly basis when the business receives the bank statement. It may also be prepared on yearly basis from January to December or some other certain period basis.
Base of reconciliation statement is_______________.
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Balance shown in Cash Book
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Balance shown in Pass Book
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Either A or B
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Neither A nor B
Explanation
Base of a reconciliation statement can either be as per cash book or bank pass book since balances of both the books are considered to know the final balance available with the business.
Bank reconciliation statement consists of all the adjustments along with the transactions recorded in bank pass book and cash book.
The proper treatment on the bank reconciliation of a debit memorandum issued by the bank is to show it as an __________.
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addition per book balance of cash
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deduction per book balance of cash
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addition per bank statement balance
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deduction per bank statement balance
Explanation
A debit memorandum or a debit memo is given by the bank to the customer to imply that the passbook balance has been reduced for reasons other than withdrawals. So, the proper treatment on the bank reconciliation of a debit memorandum is to show it as a deduction for book balance of cash.
Bank sent debit advice of Rs 500 to company on overdraft. It wasn't entered in cash book. What will be the adjustment in cash book.
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Rs 500 will be debited
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Rs 500 will be credited
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Nonadjustable
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Rs 1000 will be subtracted
Explanation
A debit advice refers to an advice or a statement sent by bank to the account holder to notify him of the charges of the bank, it is similar to bank charges charged by bank. In the present case this charge of $$Rs. 500$$ would be already charged by the bank and so the overdraft balance would have increased.
So, to adjust the same in the cash book $$Rs. 500$$ will be credited.
The proper treatment on the bank reconciliation of a note collected by the bank for the depositor is to show it as an __________.
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Addition per Book Balance of Cash
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Deduction per Book Balance of Cash
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Addition per Bank Statement Balance
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Deduction per Bank Statement Balance
Explanation
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.
Bank reconciliation statement points out _______________.
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credibility of the balance shown in pass book
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saving account
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fixed deposit account
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recurring deposit account
Explanation
A bank reconciliation statement is prepared using cash book which is prepared by the business and passbook which is prepared by the bank. When the balances of these two books are compared and reconciled, the credibility of the balances is established. Since the business prepares the cash book and the bank reconciliation statement and the passbook is prepared by the bank, the business is able to establish the credibility of the balance as per pass book which is not prepared by the business, on the basis of cash book while preparing bank reconciliation statement, which are prepared by it.
Bank reconciliation statement is the comparison of the bank statement with _______.
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Cash receipt journal
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Cash payment journal
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Cash book
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Financial statements
Explanation
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.
The proper treatment on the bank reconciliation of a note collected by the bank for the depositor is to show it as an _________.
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addition to the balance as per cash book
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deduction from the balance as per cash book
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deduction from the balance as per pass book
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addition to the balance as per pass book
Explanation
In case when the bank collects a note for the depositor the entry for the same would have been entered in the bank statement and so the cash book balance would be less than the bank statement balance.
Therefore, the proper treatment on the bank reconciliation of a note collected by the bank for the depositor is to show it as an addition to the balance as per cash book.
The difference in the balance of both the cashbook and the passbook can be because of.
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Errors in recording the entries either in the cash-book or pass-book
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Omission of same entry in both cash-book and pass book
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Debit balance of cash book is the credit balance of pass-book
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All of the above
Explanation
Errors can also be made by the bank and hence it is not necessary only the business preparing cash book shall make errors.
The difference is important to be known between the cash book and pass book to know the errors and frauds during the period in both cash book and pass book.
If something is omitted to be recorded in both the books, it may not be know since there would not be base to reconcile.
Which of the following is true about bank reconciliation statement -
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Bank reconciliation statement need not to be prepared where the balance of cash book and pass book matches.
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Bank reconciliation statement is to be prepared necessarily as per the Income tax Act, 1961.
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Bank reconciliation statement is prepared on yearly basis
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Bank reconciliation statement is to be prepared and supplied by bank.
Explanation
A bank reconciliation statement is prepared to reconcile the differences between the balance as per cash book (bank column) and balance as per pass book (bank statement by identifying the causes of differences between the two. So, in the case where the balance of cash book and pass book matches, it need not be prepared. Also, it is not required to be prepared by any act or the bank. It is prepared by the business (accountant) as per the time period it deems fit.
Entry on the debit side of pass book implies.
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Withdrawal
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Deposit
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Expenses
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Liability
Explanation
'Withdrawal' is money withdrawn by the business from the bank account from the available balance.
Debit side is 'Withdrawal' and c
redit side is 'Deposit'
as per the bank statement/ bank pass book.
A debit entry in bank pass book is a credit entry in the cash book of the business and vice versa.
If a cheque written by a firm is not canceled by the bank and returned with the month's bank statement, the firm should.
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adjust the balance in the firm's cheque book to reflect the data that appears in the bank's records.
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immediatly notify the bank requesting that it correct its records.
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consider this cheque as outstanding when preparing the bank reconciliation
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Consider this cheque to be lost and issue a replacement check.
Explanation
If a cheque written by a firm is not cancelled by the bank and returned with the bank's monthly statement, the firm should consider the cheque as outstanding while preparing the bank reconciliation statement. This means that such cheques are issued but not presented for payment. So, they reduce the balance in the cash book when they are debited but do not affect the balance in the passbook as they are not cleared by the bank yet.
The proper treatment on the bank reconciliation of a debit memorandum issued by the bank is to show it as a/an __________.
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Addition to book balance of cash
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Deduction from book balance of cash
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Addition to bank statement balance
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Deduction from bank statement balance
Explanation
A debit memorandum is issued by a bank with respect to any charges payable to it by the account holder, the entry for the same would be already passed by the bank and so the bank statement balance would be less than the cash book balance.
Therefore, the proper treatment on the bank reconciliation of a debit memorandum issued by the bank is to show it as a deduction from the book balance of cash.
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 __________.
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added
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deducted
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to be revealed only in pass book
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to be revealed only in cash book
Explanation
Overdraft facility means that the customer is allowed to withdraw money from his bank account even when the balance is zero. However, this does not affect the way in which the cheques deposited but not cleared are recorded in the cash book. Cheques deposited but not cleared are debited in the cash book (bank column). Thus, even in the case of an enterprise having overdraft facility, the bank reconciliation statement treats all the cheques deposited but not cleared as added.
How would deposits in transit be handled when reconciling the ending cash balance as per the bank statement to the correct adjusted cash balance?
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Added to the balance as per the bank statement.
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Subtracted from the balance as per the bank statement.
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Added to the balance as per company records.
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Ignored.
Explanation
In case of deposits in transit the entry for would have been entered in the cash book due to which the cash book balance would be higher than the pass book balance.
So, while reconciling the ending cash balance as per the bank statement to the correct adjusted cash balance, deposits in transit should be added to the balance as per the bank statement.
In bank reconciliation statement the account of outstanding cheques is added to ____ book balance of cash.
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Adjusted
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Unadjusted
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Understand
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Overstated
Explanation
Outstanding cheques are those cheques which have been issued for payment by the business to its suppliers or creditors but have not yet been presented for payment. This means they have been received in the cash book by crediting the cash book. So, in bank reconciliation statement, the account of outstanding cheques is added to adjusted book balance of cash.
Bank balance as per cash book (Dr.) Rs. $$25,450$$. A comparison of pass book and cash book revealed the following:
- The bank had directly collected dividend of Rs. $$400$$ and interest Rs. $$300$$.
- As per standing instruction bank had paid bills of Rs. $$2,000$$.
Balance as per pass book will be ___________ .
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Rs. $$28,150$$
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Rs. $$26,750$$
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Rs. $$22,750$$
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Rs. $$24,150$$
Explanation
The reconciliation is as follows :
Particulars
Amount in Rs.
Bank balance as per cash book (Dr.)
$$25450$$
Add
Dividend directly collected by bank
$$400$$
Add
Interest directly collected by bank
$$300$$
Less
Bills paid by bank as per standing instruction
$$2000$$
Balance as per pass book (Dr.)
$$24150$$
A bank reconciliation statement is prepared by.
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The bank
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The bank account holder
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The government
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The user of financial statements
Explanation
A bank reconciliation statement is prepared by the one who holds an account in the bank. A bank will never prepare a bank reconciliation statement but only provides with the summary of transactions undertaken by the account holder during a given period in form of a bank pass book.
Bank charges amounting to Rs. $$5,000$$ was not entered in the cash book. Identify the correct adjustment in cash book.
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Bank charges will be debited in cash book.
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Bank charges will be added to cash book balance.
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Bank charges will be credited in cash book.
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Bank charges need no adjustment in cash book.
Explanation
Bank charges are charged by bank to the account holder for the services provided by it. This expense is entered in the pass book on the debit side and should be credited in the cash book.So if the bank charges are not entered in the cash book, it should be credited to the cash book to reconcile the balances of bank as per the cash book and the pass book.
Bank balance as per pass book (CR.) Rs. $$5,090$$. A comparison of pass book and cash book revealed the following:
- The bank had directly collected dividend of Rs. $$80$$ and interest Rs. $$60$$.
- As per standing instruction, bank had paid bills of Rs. $$400$$.
Balance as per cash book will be _____________.
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Rs. $$5,630$$
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Rs. $$5,350$$
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Rs. $$4,550$$
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Rs. $$4,830$$
Explanation
The reconciliation statement is as follows :
Particulars
Amount in Rs.
Balance as per pass book (Cr.)
$$5090$$
Less
Dividend directly collected by bank
$$80$$
Less
Interest directly collected by bank
$$60$$
Add
Bills paid as per standing instruction
$$400$$
Balance as per cash book (Dr.)
$$5350$$
When debit balance as per cash book is the starting point, direct deposits by customers are __________ .
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added
0%
subtracted
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not required to be adjusted
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none of these
Explanation
In case of direct deposits by customers the entry for the same would have been entered in the pass book due to which the cash book balance would be less than the pass book balance.
So, when debit balance as per cash book is the starting point, direct deposits by customers are added to reach pass book balance.
Bank balance as per cash book (Dr.) Rs. $$27,450$$. A comparison of pass book and cash book revealed the following:
- Bank charges Rs. $$200$$ was not entered in cash books.
- Cheques amounting to Rs. $$250$$ has been dishonoured but not recorded in cash book.
Balance as per pass book will be _____ .
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Rs. $$27,000$$
0%
Rs. $$27,900$$
0%
Rs. $$27,500$$
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Rs. $$27,400$$
Explanation
The reconciliation is as follows :
Particulars
Amount in Rs.
Balance as per cash book (Dr.)
$$27450$$
Less
Bank charges not entered in cash book
$$200$$
Less
Cheque deposited but dishonoured
$$250$$
Balance as per pass book (Cr.)
$$27000$$
On $$31$$st March, $$2012$$ the pass book of Z showed a credit balance of Rs. $$2,16,000$$. A comparison of pass book and cash book revealed the following:
- Cheques deposited but not cleared by $$31$$st March $$1,08,150$$
- Cheques issued by Z but not $$26,000$$ presented for payment before $$1$$st April, $$2012$$
Balance as per cash book will be ______ .
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Rs. $$81,850$$
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Rs. $$1,33,850$$
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Rs. $$2,98,150$$
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Rs. $$3,50,150$$
Explanation
The reconciliation is as follows :
Particulars
Amount in Rs.
Balance as per pass book (Cr.)
$$216000$$
Add
Cheque deposited but not cleared
$$108150$$
Less
Cheque issued but not presented for payment
$$26000$$
Balance as per cash book (Dr.)
$$298150$$
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