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The payment side of Cash Book is under cast by Rs. 250. If the starting point of BRS is the Overdraft Balance as per Pass Book, then what would be the treatment to reach to Overdraft Balance of Cash Book ?
- a)Less 250
- b)Add 250
- c)Add 500
- d)Less 500
Correct answer is option 'A'. Can you explain this answer?
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The payment side of Cash Book is under cast by Rs. 250. If the startin...
When overdraft as per pass book is the starting point, those items will be added which makes cash book balance smaller than the pass book balance.
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The payment side of Cash Book is under cast by Rs. 250. If the startin...
Treatment to Reach Overdraft Balance of Cash Book
To reach the Overdraft Balance of Cash Book, we need to make adjustments for the undercast of Rs. 250 in the payment side of the Cash Book. The following steps should be followed:
1. Identify the Overdraft Balance as per Pass Book: The starting point of the Bank Reconciliation Statement (BRS) is the Overdraft Balance as per Pass Book. This is the amount that the bank shows as the liability of the business.
2. Identify the Overdraft Balance as per Cash Book: The Overdraft Balance as per Cash Book is the amount that the business shows as its liability. This is calculated by adding all the deposits made by the business and deducting all the payments made by the business.
3. Adjust for the Undercast: As per the given information, the payment side of the Cash Book is undercast by Rs. 250. This means that the total payments made by the business are lower by Rs. 250. To adjust for this, we need to deduct Rs. 250 from the Overdraft Balance as per Cash Book.
4. Calculate the Correct Overdraft Balance: Once we have adjusted for the undercast, we can calculate the correct Overdraft Balance as per Cash Book by adding all the deposits made by the business and deducting all the payments made by the business (including the adjustment for undercast).
5. Compare the Overdraft Balances: Finally, we need to compare the Overdraft Balance as per Pass Book and the Overdraft Balance as per Cash Book. If they match, it means that there are no more adjustments required. If they do not match, we need to identify the reasons for the difference and make appropriate adjustments.
Therefore, the answer to the given question is option 'A', i.e. Less 250.
To reach the Overdraft Balance of Cash Book, we need to make adjustments for the undercast of Rs. 250 in the payment side of the Cash Book. The following steps should be followed:
1. Identify the Overdraft Balance as per Pass Book: The starting point of the Bank Reconciliation Statement (BRS) is the Overdraft Balance as per Pass Book. This is the amount that the bank shows as the liability of the business.
2. Identify the Overdraft Balance as per Cash Book: The Overdraft Balance as per Cash Book is the amount that the business shows as its liability. This is calculated by adding all the deposits made by the business and deducting all the payments made by the business.
3. Adjust for the Undercast: As per the given information, the payment side of the Cash Book is undercast by Rs. 250. This means that the total payments made by the business are lower by Rs. 250. To adjust for this, we need to deduct Rs. 250 from the Overdraft Balance as per Cash Book.
4. Calculate the Correct Overdraft Balance: Once we have adjusted for the undercast, we can calculate the correct Overdraft Balance as per Cash Book by adding all the deposits made by the business and deducting all the payments made by the business (including the adjustment for undercast).
5. Compare the Overdraft Balances: Finally, we need to compare the Overdraft Balance as per Pass Book and the Overdraft Balance as per Cash Book. If they match, it means that there are no more adjustments required. If they do not match, we need to identify the reasons for the difference and make appropriate adjustments.
Therefore, the answer to the given question is option 'A', i.e. Less 250.
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The payment side of Cash Book is under cast by Rs. 250. If the startin...
My answer B.Becuse if the payment side of cash book is undercast means the pass book must be understated balance.tell me correct answer.
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The payment side of Cash Book is under cast by Rs. 250. If the starting point of BRS is the Overdraft Balance as per Pass Book, then what would be the treatment to reach to Overdraft Balance of Cash Book ?a)Less 250b)Add 250c)Add 500d)Less 500Correct answer is option 'A'. Can you explain this answer?
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