Test: Bank Reconciliation Statement - 2 - Commerce MCQ

To find the balance as per the Pass Book, let's analyze step by step:

1. Favourable balance as per Cash Book = ₹5,000.

2. Debit side of Cash Book undercast by ₹2,000:

   • This means ₹2,000 less was recorded in the Cash Book than it should be. To adjust this, we add ₹2,000 to the Cash Book balance.
     Adjusted balance = ₹5,000 + ₹2,000 = ₹7,000.

3. Cheque of ₹3,000 dishonoured, no entry in Cash Book:

   • A dishonoured cheque means it was not credited to the bank account. Since this is not recorded in the Cash Book, we subtract ₹3,000 from the Cash Book balance.
     Final adjusted balance = ₹7,000 - ₹3,000 = ₹4,000.

Hence, the balance as per Pass Book is ₹4,000.

Correct answer: A: ₹4,000.

- Bank Reconciliation Statement: Used to reconcile the bank balance as per bank statement with the company's cash book.

- Debit Balance on Bank Statement: Indicates the bank account is overdrawn.

- Unpresented Cheques: Cheques issued by the company but not yet cleared by the bank.

- Adjustment:
- When starting with a debit balance (overdraft) on the bank statement, unpresented cheques should be added.
- This is because the bank balance is understated by the amount not yet deducted for these cheques.

Thus, the correct answer is A: Added.

- Interest Allowed by Bank: This refers to the interest credited by the bank into the account holder’s account, increasing the balance in the Pass Book (bank statement).

- Pass Book Balance: When using the Pass Book balance as a starting point, adjustments made are relative to this balance.

- Adjustment: Since the interest allowed by the bank increases the Pass Book balance, you would not subtract it when reconciling; instead, you should add it to the Cash Book balance if needed for reconciliation. Thus, it is not required to be adjusted.

Correct answer: B: Not required to be adjusted.

- The debit balance in the Cash Book is Rs. 1,500.
- Cheques deposited but not cleared (Rs. 100) should be deducted because they are not yet reflected in the bank account.
- Cheques issued but not presented (Rs. 150) should be added as they have not yet been debited by the bank.
- The bank added Rs. 50 as interest and Rs. 50 as dividends to the account.

Calculation:
1,500 - 100 + 150 + 50 + 50 = 1,650 

Thus, the balance as per the Pass Book is Rs. 1,650 (Option D).

- When reconciling the Cash Book balance to the Bank Statement, direct deposits by customers are transactions that increase the bank balance but might not yet be recorded in the Cash Book.
- Since these deposits increase the actual bank balance, you need to add them to the Cash Book balance to reconcile it with the Bank Statement.
- Thus, the correct answer is A: Added. This ensures that the Cash Book reflects all funds available in the bank.

- Start with the Cash Book Overdraft: The initial overdraft as per the cash book is Rs. 10,500.

- Adjust for Bank Interest: The bank debited Rs. 3,500 for interest not known to the account holder. This increases the overdraft, so add Rs. 3,500.

- Adjust for Deposited but Uncredited Cheques: Cheques amounting to Rs. 7,500 are deposited but not yet credited by the bank. This also increases the overdraft, so add Rs. 7,500.

- Adjust for Issued but Unpresented Cheques: Cheques issued but not yet presented amount to Rs. 9,500. This reduces the overdraft, so subtract Rs. 9,500.

- Calculate Overdraft as per Pass Book:

{Overdraft as per Pass Book} = 10,500 + 3,500 + 7,500 - 9,500 = 12,000


- Correct Answer: A: Rs. 12,000

- Uncollected cheques are cheques deposited but not yet cleared by the bank.
- When starting with the Pass Book (Bank Statement) balance, these cheques are not included because they haven't been processed.
- To reconcile, you must adjust for these cheques.
- Add uncollected cheques to the Pass Book balance in the bank reconciliation statement.
- This reflects the amount that will eventually be credited to your account, aligning it with the Cash Book balance.

Therefore Option A is the correct answer.

- Bank Reconciliation Statement: It reconciles the balance as per the Cash Book with the balance as per the Bank Statement.

- Uncollected Cheques: These are cheques that have been recorded in the Cash Book but not yet cleared by the bank.

- Effect on Reconciliation:
- Since these cheques are recorded in the Cash Book but not yet reflected in the Bank Statement, the balance as per the Cash Book is higher.
- Therefore, to reconcile, subtract uncollected cheques from the Cash Book balance.

- Correct Answer: B. Subtracted in the bank reconciliation statement.

- A bank statement is a document provided by the bank to its customers.
- It shows all transactions in a customer’s bank account over a specific period.
- It includes deposits, withdrawals, and any charges or interest applied.
- The bank statement is essentially a reflection of the customer’s account in the bank's records.
- Therefore, it is a copy of a customer account in the bank book, which is why the correct answer is C.

- The bank originally charged Rs. 1,000, which the accountant recorded as a deduction in the books.
- When the bank reverses this charge, the bank statement reflects Rs. 1,000 more than the books, because the reversal was not communicated to the accountant.
- To reconcile this, Rs. 1,000 must be added to the book balance to match the bank statement.
- Therefore, the correct treatment in the Bank Reconciliation Statement is to add Rs. 1,000.

- When preparing a bank reconciliation statement, the goal is to adjust the cash book balance to reflect the true bank balance.

- Starting with an overdraft as per the cash book means you have a negative balance in your records.

- A cheque of Rs. 5,500 was deposited and credited by the bank but not recorded in the cash book.

- This omission causes the cash book balance to be understated.

- To correct this, you must add Rs. 5,500 to the cash book balance, not deduct it.

Therefore, the correct answer is B: Rs. 5,500 will be added.

- A Bank Reconciliation Statement is used to reconcile the differences between a company's Cash Book and the bank statement.
- The Cash Book has two columns: the bank column, which records transactions related to the bank account, and the cash column, which records cash transactions.
- The Bank Statement is provided by the bank and records all transactions from the bank's perspective.
- To prepare a Bank Reconciliation Statement, compare the Bank Statement with the bank column of the Cash Book to identify discrepancies.
- Therefore, the correct answer is A: Bank statement and bank column of the Cash Book.

- A bank reconciliation statement is a tool used to match the balance in a company's accounting records for a cash account to the corresponding information on a bank statement.
- It highlights discrepancies due to timing differences and errors, such as delays in cheque clearance or unauthorized transactions.
- A bank reconciliation statement is prepared by the company, not the bank.
- Therefore, option C is incorrect because reconciliation is done by the company’s accountants, not by bankers.

- The bank book shows a credit balance of Rs. 7,074, indicating a bank overdraft (liability).
- The bank statement shows a debit balance of Rs. 3,159, suggesting funds available in the bank.
- The difference is due to unpresented cheques, meaning cheques were issued but not yet cleared.
- The actual overdraft is represented by the bank book balance.
- Therefore, the correct balance to show in the balance sheet is the bank overdraft of Rs. 7,074, making option C correct.

- The error of recording a payment of Rs. 10,000 as Rs. 1,000 will cause a discrepancy between the company's bank records and the bank statement.
- A Bank Reconciliation Statement is prepared to identify and reconcile such discrepancies between the bank book and the bank statement.
- By comparing the bank book with the bank statement, the error can be detected as the cheque issued for Rs. 10,000 will reflect differently in the bank statement, highlighting the recording mistake.

- The bank overdraft as per the Cash Book is Rs. 8,720.
- Cheques amounting to Rs. 690 were deposited but not yet credited by the bank until 31st May.
- These cheques will reduce the bank overdraft once credited.
- To find the overdraft as per the Pass Book, add the uncredited amount to the Cash Book overdraft because the bank hasn’t recognized these deposits yet.
- Calculation: Rs. 8,720 + Rs. 690 = Rs. 9,410.
- Therefore, the bank overdraft as per the Pass Book is Rs. 9,410.
- Correct answer: C: Rs. 9,410.

- Cash Book Overdraft: Mr. X shows an overdraft of Rs. 20,500.
- Direct Deposit by Customer: A customer deposited Rs. 50,000 directly into the bank, unknown to Mr. X. This increases the bank balance, reducing the overdraft.
- Cheque Deposited but Unpaid: A cheque for Rs. 25,000 was returned unpaid, which means it was not credited to Mr. X’s bank account, maintaining the overdraft situation.

Calculation:
- Start with overdraft: Rs. 20,500
- Add direct deposit: Rs. 50,000
- Subtract bounced cheque: Rs. 25,000

Net Bank Balance: Rs. 4,500 credit.

Thus, the correct answer is A: Rs. 4,500 credit.

- The Cash Book shows an overdraft of Rs. 1,500.
- Cheques totaling Rs. 275 (Rs. 100 + Rs. 50 + Rs. 125) have not been presented for payment.
- These unpresented cheques would reduce the overdraft if accounted for, as they have not yet been deducted from the bank balance.
- A cheque of Rs. 400 has not been cleared, meaning it increases the overdraft temporarily.
- Adjusting for the unpresented cheques, the balance as per the Cash Book is Rs. 1,625.

Overdraft = Rs.( 2000 - 100 - 150 - 175 + 600 )

= Rs. 2175

- A Bank Reconciliation Statement is prepared by the bank account holder.
- It is a tool used to match the account holder’s records against the bank statement.
- The goal is to identify discrepancies due to outstanding checks, deposits in transit, or bank errors.
- This process ensures that the financial records are accurate and complete.
- It helps the account holder maintain accurate financial records and detect any unauthorized transactions.