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When balance as per Pass Book is the starting point, interest allowed by Bank is
- a)added
- b)subtracted
- c)not required to be adjusted.
- d)None of the above.
Correct answer is 'B'. Can you explain this answer?
Most Upvoted Answer
When balance as per Pass Book is the starting point, interest allowed ...
The answer is b
Uncollected cheques means cheque deposited in bank but not cleared. Entry for Such cheque would have been made In cash book but not in pass book. So, for reconciliation such amount need to be subtracted as it would have been already added.
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When balance as per Pass Book is the starting point, interest allowed ...
Explanation:
When we talk about a Pass Book, it is essentially a record of all the transactions that have taken place in a bank account. The Pass Book is updated by the bank on a regular basis, usually on a monthly basis, and it reflects all the credits and debits that have taken place during that period.
One of the important things that we need to understand about a Pass Book is that it reflects the balance in the account as of a particular date. This balance is what we call the "balance as per Pass Book".
Now, when we talk about interest on bank accounts, we need to understand that the bank pays interest on the balance in the account. This interest is calculated on a daily or monthly basis, depending on the bank's policy. The interest is usually credited to the account at the end of a specified period, which could be monthly, quarterly or annually.
When the Pass Book is updated, it reflects the interest that has been credited to the account. This interest is added to the balance as per Pass Book. So, if the balance as per Pass Book was Rs. 10,000 and the bank credited Rs. 100 as interest, the Pass Book would reflect a balance of Rs. 10,100.
However, when we talk about reconciling the Pass Book with the bank statement, we need to understand that the bank statement reflects the balance in the account as of a different date. This is because the bank statement is generated at the end of a specified period, which could be a month or a quarter. So, when we compare the Pass Book with the bank statement, we need to make adjustments for any transactions that have taken place between the date of the Pass Book and the date of the bank statement.
In the case of interest, we need to subtract the interest that has been credited by the bank from the balance as per Pass Book. This is because the interest has been credited by the bank, but it has not yet been reflected in the bank statement. So, if the Pass Book shows a balance of Rs. 10,100 and the bank statement shows a balance of Rs. 10,000, we need to subtract the interest of Rs. 100 from the Pass Book balance to arrive at the correct balance as of the date of the bank statement.
When we talk about a Pass Book, it is essentially a record of all the transactions that have taken place in a bank account. The Pass Book is updated by the bank on a regular basis, usually on a monthly basis, and it reflects all the credits and debits that have taken place during that period.
One of the important things that we need to understand about a Pass Book is that it reflects the balance in the account as of a particular date. This balance is what we call the "balance as per Pass Book".
Now, when we talk about interest on bank accounts, we need to understand that the bank pays interest on the balance in the account. This interest is calculated on a daily or monthly basis, depending on the bank's policy. The interest is usually credited to the account at the end of a specified period, which could be monthly, quarterly or annually.
When the Pass Book is updated, it reflects the interest that has been credited to the account. This interest is added to the balance as per Pass Book. So, if the balance as per Pass Book was Rs. 10,000 and the bank credited Rs. 100 as interest, the Pass Book would reflect a balance of Rs. 10,100.
However, when we talk about reconciling the Pass Book with the bank statement, we need to understand that the bank statement reflects the balance in the account as of a different date. This is because the bank statement is generated at the end of a specified period, which could be a month or a quarter. So, when we compare the Pass Book with the bank statement, we need to make adjustments for any transactions that have taken place between the date of the Pass Book and the date of the bank statement.
In the case of interest, we need to subtract the interest that has been credited by the bank from the balance as per Pass Book. This is because the interest has been credited by the bank, but it has not yet been reflected in the bank statement. So, if the Pass Book shows a balance of Rs. 10,100 and the bank statement shows a balance of Rs. 10,000, we need to subtract the interest of Rs. 100 from the Pass Book balance to arrive at the correct balance as of the date of the bank statement.
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When balance as per Pass Book is the starting point, interest allowed by Bank isa)addedb)subtractedc)not required to be adjusted.d)None of the above.Correct answer is 'B'. Can you explain this answer?
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