Test: Bank Reconciliation Statement - 4 - Commerce MCQ

When the balance as per Cash Book is the starting point, direct deposits by customers are:
According to the given question, when the balance as per Cash Book is the starting point, we need to determine what happens to direct deposits made by customers. The options provided are:
A:

added

B:

subtracted;

C:

not required to be adjusted

D:

neither of the two

To find the correct answer, let's analyze each option:
A:

added

If direct deposits made by customers are added to the balance as per Cash Book, it means that these deposits increase the cash balance.
B:

subtracted;

If direct deposits made by customers are subtracted from the balance as per Cash Book, it means that these deposits decrease the cash balance.
C:

not required to be adjusted

If direct deposits made by customers are not required to be adjusted, it means that the balance as per Cash Book already includes these deposits, and no further action is needed.
D:

neither of the two

If direct deposits made by customers neither increase nor decrease the balance as per Cash Book, it means that these deposits have no impact on the cash balance.
Based on the analysis, the correct answer is A:

added

. Direct deposits made by customers are added to the balance as per Cash Book, increasing the cash balance.

The main purpose of preparing a bank reconciliation statement is to:
1. Identify discrepancies: The reconciliation statement helps to identify any differences between the cash book balance and the bank statement balance. These discrepancies can occur due to various reasons such as outstanding checks, deposits in transit, bank errors, or errors in the cash book.
2. Correct errors: By comparing the cash book and bank statement, any errors or omissions in recording transactions can be identified and rectified. This ensures that the cash book accurately reflects the true financial position of the business.
3. Ensure accuracy: The bank reconciliation statement helps in ensuring the accuracy of the cash book and bank statement balances. By reconciling the two, any mistakes or missing transactions can be identified, leading to a more accurate financial record.
4. Prevent fraud: The bank reconciliation statement helps to detect any fraudulent activities such as unauthorized withdrawals or deposits. By carefully reviewing and reconciling the bank statement, any suspicious transactions can be identified and investigated.
5. Monitor cash flow: The bank reconciliation statement provides valuable information about the cash flow of the business. It helps in tracking outstanding checks, deposits in transit, and any other pending transactions, allowing the business to effectively manage its cash flow.
Overall, the bank reconciliation statement serves as a crucial tool for ensuring the accuracy of financial records, detecting errors and fraud, and maintaining a clear understanding of the business's cash position.

When balance as per Pass Book is the starting point, interest allowed by Bank is:
A: Added
- When the balance as per the Pass Book is the starting point, the interest allowed by the bank is typically added to the balance.
B: Subtracted
- The interest allowed by the bank is not subtracted from the balance as per the Pass Book.
C: Not required to be adjusted
- The interest allowed by the bank is required to be adjusted to the balance as per the Pass Book.
D: None of the above
- None of the above options are correct.

Bank Reconciliation Statement is a statement prepared to reconcile the balance as per the bank statement with the balance as per the cash book. It helps to identify any discrepancies or errors between the two records.
The Bank Reconciliation Statement is prepared with the help of the following documents:
1. Bank Statement: This is a statement issued by the bank that provides details of all the transactions made in the bank account during a specific period. It includes information about deposits, withdrawals, bank charges, and other relevant information.
2. Bank Column of the Cash Book: The cash book is a subsidiary book that records all cash and bank transactions. The bank column of the cash book specifically records all transactions related to the bank account, such as deposits, withdrawals, and bank charges.
The process of preparing a Bank Reconciliation Statement involves the following steps:
1. Compare the Bank Statement and the Bank Column of the Cash Book: Start by comparing the transactions recorded in the bank statement with those recorded in the bank column of the cash book. Match each transaction and note down any discrepancies.
2. Identify Outstanding Transactions: Identify any transactions that are recorded in either the bank statement or the bank column of the cash book but not in the other. These are called outstanding transactions and need to be adjusted in the reconciliation statement.
3. Adjust for Outstanding Deposits: If there are any outstanding deposits, add them to the balance as per the cash book. These deposits may include cheques or electronic transfers that have not yet been cleared by the bank.
4. Adjust for Outstanding Withdrawals: If there are any outstanding withdrawals, subtract them from the balance as per the cash book. These withdrawals may include cheques or electronic transfers that have been issued but not yet cleared by the bank.
5. Add or Deduct Bank Charges: If there are any bank charges or fees recorded in either the bank statement or the bank column of the cash book, they should be added or deducted accordingly.
6. Calculate the Adjusted Balance: After making all the necessary adjustments, calculate the adjusted balance as per the cash book.
7. Reconcile the Balance: Compare the adjusted balance as per the cash book with the balance as per the bank statement. If both balances match, the reconciliation is complete. If there is still a difference, further investigation is required to identify the cause of the discrepancy.
In conclusion, a Bank Reconciliation Statement is prepared with the help of the bank statement and the bank column of the Cash Book. These documents are used to compare and reconcile the balances and identify any discrepancies or errors. The reconciliation process involves adjusting for outstanding transactions and bank charges to arrive at the correct balance.

 

Cash book = 2000 Cheque not been present cash book( +) beacause overdraft isliye(-)200+150+175=1475600 paid cash book less karte hain lekin overdraft hain isliye add karna padta hain to
2000-(200+150+175)+600=2075

Cheques issued but not presented for payment are entered in the cash book at the moment the cheques are drawn but would not be reflected in the pass book and so the cash book balance would be higher.
Therefore, when drawing up a bank reconciliation statement, if you start with a debit balance as per pass book, the cheques issued but not presented for payments should be added to reach the cash book balance.

Explanation:
When there is a debit balance in the depositor's Cash Book, it means that the depositor has withdrawn more money from the bank account than the available balance. This results in an overdrawn balance in the depositor's account.
The Bank Statement, on the other hand, reflects the actual transactions and balances in the bank account. It is prepared by the bank and sent to the depositor.
Based on the given options:
- Option A: a debit balance on the Bank Statement: This is incorrect because a debit balance in the Cash Book does not necessarily mean a debit balance on the Bank Statement.
- Option B: a credit balance on the Bank Statement: This is the correct answer. When there is a debit balance in the Cash Book, it will be shown as a credit balance on the Bank Statement to reflect the overdrawn status.
- Option C: an overdrawn balance on Bank Statement: This is incorrect because an overdrawn balance is not specifically mentioned in the options.
- Option D: None of the above: This is incorrect because option B, "a credit balance on the Bank Statement," is the correct answer.
Therefore, the correct answer is option B: a credit balance on the Bank Statement.

Bank Reconciliation Statement


When preparing a Bank Reconciliation Statement, if you start with a debit balance as per the Cash Book, cheques issued but not presented within the period should be added. Here is a detailed explanation:
1. Bank Reconciliation Statement:
A Bank Reconciliation Statement is a document that compares the balances of the cash book (maintained by the company) and the bank statement (provided by the bank). It helps in identifying any discrepancies and reconciling the differences between the two balances.
2. Debit Balance as per Cash Book:
If the starting balance in the Cash Book is a debit balance, it means that the company has overdrawn or has issued more cheques than the available cash balance.
3. Cheques Issued but Not Presented:
When cheques are issued by the company but not presented to the bank within the period under consideration, these cheques are still considered as outstanding payments. They have not yet been deducted from the bank balance.
4. Treatment of Outstanding Cheques:
To reconcile the debit balance as per the Cash Book, the outstanding cheques need to be adjusted. They should be added back to the Cash Book balance because they reduce the actual bank balance available to the company.
5. Answer:
Therefore, when starting with a debit balance as per the Cash Book, the correct treatment for cheques issued but not presented within the period is to add them back. Hence, the answer is A: Added.

Explanation:
When the balance as per Pass Book is the starting point, direct payment by bank can be treated in the following ways in the bank reconciliation statement:

• Option A: Added in the bank reconciliation statement


• Option B: Subtracted in the bank reconciliation statement


• Option C: Not required to be adjusted in the bank reconciliation statement


• Option D: Neither of the above

The correct answer is option A, where direct payments made by the bank are added in the bank reconciliation statement. This is because when the balance as per Pass Book is taken as the starting point, any direct payments made by the bank would not be reflected in the Pass Book balance. Therefore, to reconcile the difference between the Pass Book balance and the bank statement balance, these direct payments need to be added back.
In summary, when the balance as per Pass Book is the starting point, direct payments made by the bank are added in the bank reconciliation statement to reconcile the difference between the Pass Book balance and the bank statement balance.

Explanation:
When the balance as per Cash Book is the starting point, uncollected cheques are subtracted in the bank reconciliation statement. This is because the balance as per Cash Book represents the amount of money recorded in the company's books, while the bank reconciliation statement reconciles the company's records with the bank's records. Uncollected cheques are cheques that have been issued by the company but have not yet been presented to the bank for payment. As a result, they are still considered as part of the company's cash balance in the Cash Book but are not reflected in the bank's records. Therefore, they need to be subtracted from the balance as per Cash Book in order to reconcile the company's records with the bank's records.
Summary:
When the balance as per Cash Book is the starting point, uncollected cheques are subtracted in the bank reconciliation statement to reconcile the company's records with the bank's records.

Bank Reconciliation Statement:
A Bank Reconciliation Statement is prepared to identify the causes for the difference between the balances as per the bank column of the Cash Book and the balances as per the Pass Book. This statement helps in reconciling the discrepancies and ensuring the accuracy of the financial records.
Reasons for the Difference:
The following are the possible reasons for the difference between the balance as per the bank column of the Cash Book and the balance as per the Pass Book:
1. Outstanding Checks: These are the checks issued by the company but have not yet been presented to the bank for payment. As a result, the Cash Book balance will be higher than the Pass Book balance.
2. Deposits in Transit: These are the cash or checks deposited by the company but have not yet been credited by the bank. Consequently, the Cash Book balance will be lower than the Pass Book balance.
3. Bank Charges: The bank may deduct service charges or fees for various transactions. If these charges are not recorded in the Cash Book, the balance as per the bank column will be higher than the Pass Book balance.
4. Bank Interest: The bank may credit interest on the company's deposits. If this interest is not recorded in the Cash Book, the balance as per the bank column will be higher than the Pass Book balance.
5. Errors: Errors in recording transactions, such as incorrect amounts or dates, can also cause differences in the balances.
Steps to Prepare a Bank Reconciliation Statement:
To prepare a Bank Reconciliation Statement, follow these steps:
1. Compare the balances: Compare the balance as per the bank column of the Cash Book with the balance as per the Pass Book.
2. Identify the reasons: Identify the reasons for the difference between the two balances by analyzing the transactions and documents.
3. Adjustments: Make necessary adjustments in the Cash Book to account for outstanding checks, deposits in transit, bank charges, bank interest, and any other discrepancies.
4. Reconcile the balances: After making the adjustments, reconcile the balances by adding or deducting the necessary amounts to bring both balances in agreement.
5. Prepare the statement: Finally, prepare the Bank Reconciliation Statement, which shows the adjusted balance as per the Cash Book and the adjusted balance as per the Pass Book.
Conclusion:
A Bank Reconciliation Statement is an essential tool for ensuring the accuracy of financial records and identifying any discrepancies between the Cash Book and the Pass Book balances. By analyzing the reasons for the differences and making necessary adjustments, companies can maintain accurate financial records and mitigate any potential errors or fraud.

Explanation:
The correct answer is A: added in the bank reconciliation statement. Here's why:
1. Bank Reconciliation Statement: The bank reconciliation statement is prepared to reconcile the differences between the bank's balance as per the passbook and the balance as per the company's records.
2. Uncollected Cheques: Uncollected cheques are the cheques issued by the company but have not yet been presented for payment at the bank.
3. Treatment in Bank Reconciliation Statement: When the balance as per the passbook is taken as the starting point, uncollected cheques need to be added to the passbook balance in the bank reconciliation statement.
4. Reason for Adding: The uncollected cheques represent the company's funds that have been deducted from the passbook balance but have not yet been debited to the company's bank account. Therefore, they need to be added back to the passbook balance to reconcile the two balances.
To summarize, uncollected cheques are added in the bank reconciliation statement when the balance as per the passbook is the starting point.

When the balance as per Cash Book is the starting point, direct deposits by customers are:


A: Added
- When the balance as per Cash Book is the starting point, direct deposits by customers are added to the balance.
B: Subtracted
- Direct deposits by customers are not subtracted from the balance as per Cash Book.
C: Not required to be adjusted
- Direct deposits by customers are required to be adjusted in the Cash Book to reflect the actual cash balance.
D: None of these
- Direct deposits by customers are not none of these options.
Answer: A: Added
- The correct answer is A: Added. Direct deposits by customers are added to the balance as per Cash Book.