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If bank balance as per cash book differs from that appearing in the current account statement, then the balance considered for finalizing the accounts is of
- a)Adjusted cash book.
- b)Cash book before any adjustments.
- c)Pass book.
- d)Not taken to final accounts in case of difference in the balance
Correct answer is option 'A'. Can you explain this answer?
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Most Upvoted Answer
If bank balance as per cash book differs from that appearing in the cu...
Explanation:
When bank balance as per cash book differs from that appearing in the current account statement, it is necessary to reconcile the two balances. This is done by preparing a Bank Reconciliation Statement (BRS).
The BRS lists out the various reasons for the difference in the two balances, such as:
- Cheques issued but not yet presented for payment
- Cheques deposited but not yet credited by the bank
- Bank charges and interest not recorded in the cash book
- Errors in recording transactions in the cash book or in the bank statement
Once the BRS is prepared, the adjusted balance as per the cash book is taken as the final balance for the purpose of finalizing the accounts. This is because the cash book is maintained by the organization and therefore reflects the actual cash and bank transactions of the organization.
The other options given in the question are not correct because:
- Cash book before any adjustments (option B) does not reflect the true balance as it does not take into account the various reconciling items.
- Pass book (option C) is the same as the current account statement issued by the bank, so it is not a different balance to be considered for finalizing the accounts.
- Not taken to final accounts in case of difference in the balance (option D) is not a correct option as the difference needs to be reconciled and an adjusted balance needs to be arrived at for finalizing the accounts.
Therefore, the correct answer is option A - Adjusted cash book.
When bank balance as per cash book differs from that appearing in the current account statement, it is necessary to reconcile the two balances. This is done by preparing a Bank Reconciliation Statement (BRS).
The BRS lists out the various reasons for the difference in the two balances, such as:
- Cheques issued but not yet presented for payment
- Cheques deposited but not yet credited by the bank
- Bank charges and interest not recorded in the cash book
- Errors in recording transactions in the cash book or in the bank statement
Once the BRS is prepared, the adjusted balance as per the cash book is taken as the final balance for the purpose of finalizing the accounts. This is because the cash book is maintained by the organization and therefore reflects the actual cash and bank transactions of the organization.
The other options given in the question are not correct because:
- Cash book before any adjustments (option B) does not reflect the true balance as it does not take into account the various reconciling items.
- Pass book (option C) is the same as the current account statement issued by the bank, so it is not a different balance to be considered for finalizing the accounts.
- Not taken to final accounts in case of difference in the balance (option D) is not a correct option as the difference needs to be reconciled and an adjusted balance needs to be arrived at for finalizing the accounts.
Therefore, the correct answer is option A - Adjusted cash book.
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If bank balance as per cash book differs from that appearing in the cu...
The correct answer is: Adjusted cash book
When finalizing the accounts, the balance considered is from the adjusted cash book, and here's why:
1. Reconciliation of differences: There might be differences between the cash book and the passbook (bank statement) for various reasons, such as timing differences, bank charges, interest, or errors. The adjusted cash book considers these differences and reconciles the balances.
2. Accurate representation of transactions: The adjusted cash book provides an accurate representation of all transactions that have taken place, including those that have not been recorded in the cash book or passbook. This ensures that the financial statements are based on complete and accurate information.
3. Error detection and correction: The process of preparing the adjusted cash book helps identify errors and discrepancies in the cash book or passbook. By rectifying these errors, the adjusted cash book provides a more reliable balance for finalizing the accounts.
4. Compliance with accounting principles: Using the adjusted cash book balance ensures that the final accounts are prepared in accordance with generally accepted accounting principles (GAAP), which emphasize the importance of accurate and consistent financial reporting.
In summary, the adjusted cash book balance is considered for finalizing the accounts because it reconciles differences between the cash book and passbook, provides an accurate representation of transactions, aids in error detection and correction, and ensures compliance with accounting principles.
When finalizing the accounts, the balance considered is from the adjusted cash book, and here's why:
1. Reconciliation of differences: There might be differences between the cash book and the passbook (bank statement) for various reasons, such as timing differences, bank charges, interest, or errors. The adjusted cash book considers these differences and reconciles the balances.
2. Accurate representation of transactions: The adjusted cash book provides an accurate representation of all transactions that have taken place, including those that have not been recorded in the cash book or passbook. This ensures that the financial statements are based on complete and accurate information.
3. Error detection and correction: The process of preparing the adjusted cash book helps identify errors and discrepancies in the cash book or passbook. By rectifying these errors, the adjusted cash book provides a more reliable balance for finalizing the accounts.
4. Compliance with accounting principles: Using the adjusted cash book balance ensures that the final accounts are prepared in accordance with generally accepted accounting principles (GAAP), which emphasize the importance of accurate and consistent financial reporting.
In summary, the adjusted cash book balance is considered for finalizing the accounts because it reconciles differences between the cash book and passbook, provides an accurate representation of transactions, aids in error detection and correction, and ensures compliance with accounting principles.
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If bank balance as per cash book differs from that appearing in the current account statement, then the balance considered for finalizing the accounts is ofa)Adjusted cash book.b)Cash book before any adjustments.c)Pass book.d)Not taken to final accounts in case of difference in the balanceCorrect answer is option 'A'. Can you explain this answer?
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If bank balance as per cash book differs from that appearing in the current account statement, then the balance considered for finalizing the accounts is ofa)Adjusted cash book.b)Cash book before any adjustments.c)Pass book.d)Not taken to final accounts in case of difference in the balanceCorrect answer is option 'A'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about If bank balance as per cash book differs from that appearing in the current account statement, then the balance considered for finalizing the accounts is ofa)Adjusted cash book.b)Cash book before any adjustments.c)Pass book.d)Not taken to final accounts in case of difference in the balanceCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If bank balance as per cash book differs from that appearing in the current account statement, then the balance considered for finalizing the accounts is ofa)Adjusted cash book.b)Cash book before any adjustments.c)Pass book.d)Not taken to final accounts in case of difference in the balanceCorrect answer is option 'A'. Can you explain this answer?.
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