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Favourable balance as per Cash Book means:
- a)Debit balance in the bank column of the cash book
- b)Debit balance in the pass book
- c)Credit balance in the bank column of the cash book
- d)None of these
Correct answer is option 'A'. Can you explain this answer?
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Most Upvoted Answer
Favourable balance as per Cash Book means:a)Debit balance in the bank ...
Favourable balance in Cash Book
The cash book is a book of original entry in which all cash transactions are recorded. It is divided into two columns, one for cash receipts and the other for cash payments. The bank column is also present in the cash book to record bank transactions.
A favourable balance in the cash book means that the total of the debit side of the bank column is greater than the credit side of the bank column. This indicates that the business has more cash in the bank than it has paid out.
For example, suppose the bank column in the cash book has the following transactions:
Debit Side:
- Deposits: $5,000
- Bank Charges: $50
- Cheques Issued: $2,500
Credit Side:
- Bank Interest: $100
- Cheques Received: $3,500
In this case, the total of the debit side of the bank column is $2,550 ($5,000 + $50 - $2,500), and the total of the credit side is $3,600 ($100 + $3,500). Therefore, the favourable balance in the cash book is $1,050 ($3,600 - $2,550).
Conclusion
Hence, option (a) Debit balance in the bank column of the cash book is the correct answer. A favourable balance in the cash book indicates that the business has more cash in the bank than it has paid out, which is a positive sign for the business.
The cash book is a book of original entry in which all cash transactions are recorded. It is divided into two columns, one for cash receipts and the other for cash payments. The bank column is also present in the cash book to record bank transactions.
A favourable balance in the cash book means that the total of the debit side of the bank column is greater than the credit side of the bank column. This indicates that the business has more cash in the bank than it has paid out.
For example, suppose the bank column in the cash book has the following transactions:
Debit Side:
- Deposits: $5,000
- Bank Charges: $50
- Cheques Issued: $2,500
Credit Side:
- Bank Interest: $100
- Cheques Received: $3,500
In this case, the total of the debit side of the bank column is $2,550 ($5,000 + $50 - $2,500), and the total of the credit side is $3,600 ($100 + $3,500). Therefore, the favourable balance in the cash book is $1,050 ($3,600 - $2,550).
Conclusion
Hence, option (a) Debit balance in the bank column of the cash book is the correct answer. A favourable balance in the cash book indicates that the business has more cash in the bank than it has paid out, which is a positive sign for the business.
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Community Answer
Favourable balance as per Cash Book means:a)Debit balance in the bank ...
Cash is an asset and all assets have debit balance and for bank reconciliation statement we have to find all transactions with bank which we find in bank column of cash book
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Favourable balance as per Cash Book means:a)Debit balance in the bank column of the cash bookb)Debit balance in the pass bookc)Credit balance in the bank column of the cash bookd)None of theseCorrect answer is option 'A'. Can you explain this answer?
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