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If we take balance as per Pass book which of the following will be deducted to get balance as per cash book :
- a)Interest given by bank
- b)Interest charged by Bank
- c)Cheque deposited but not cleared
- d)payment made by bank under standing instructions
Correct answer is option 'A'. Can you explain this answer?
Verified Answer
If we take balance as per Pass book which of the following will be ded...
Deductions to get balance as per cash book
- Interest given by bank: Interest given by the bank is added to the pass book balance but needs to be deducted from the cash book balance to reconcile the two.
Most Upvoted Answer
If we take balance as per Pass book which of the following will be ded...
To get the balance as per the cash book, the following items will be deducted from the balance as per the passbook:
a) Interest given by the bank
Interest given by the bank is an income for the account holder and needs to be deducted from the balance as per the passbook to get the correct balance as per the cash book. When the bank pays interest on the account holder's savings or fixed deposit, it increases the balance as per the passbook. However, since this interest is not recorded in the cash book, it needs to be deducted.
Example: If the passbook shows a balance of $10,000 and the bank has credited $500 as interest, the balance as per the cash book would be $9,500 ($10,000 - $500).
b) Interest charged by the bank
Interest charged by the bank is an expense for the account holder and is not recorded in the cash book. Therefore, it does not affect the balance as per the cash book and should not be deducted.
c) Cheque deposited but not cleared
Cheques deposited but not cleared are already recorded in the cash book as receipts. Therefore, they do not need to be deducted again to get the balance as per the cash book.
d) Payment made by the bank under standing instructions
Payments made by the bank under standing instructions are already recorded in the cash book as payments. Therefore, they do not need to be deducted again to get the balance as per the cash book.
In summary, to get the balance as per the cash book, only interest given by the bank needs to be deducted from the balance as per the passbook. Other items such as interest charged by the bank, cheques deposited but not cleared, and payments made by the bank under standing instructions do not affect the balance as per the cash book.
a) Interest given by the bank
Interest given by the bank is an income for the account holder and needs to be deducted from the balance as per the passbook to get the correct balance as per the cash book. When the bank pays interest on the account holder's savings or fixed deposit, it increases the balance as per the passbook. However, since this interest is not recorded in the cash book, it needs to be deducted.
Example: If the passbook shows a balance of $10,000 and the bank has credited $500 as interest, the balance as per the cash book would be $9,500 ($10,000 - $500).
b) Interest charged by the bank
Interest charged by the bank is an expense for the account holder and is not recorded in the cash book. Therefore, it does not affect the balance as per the cash book and should not be deducted.
c) Cheque deposited but not cleared
Cheques deposited but not cleared are already recorded in the cash book as receipts. Therefore, they do not need to be deducted again to get the balance as per the cash book.
d) Payment made by the bank under standing instructions
Payments made by the bank under standing instructions are already recorded in the cash book as payments. Therefore, they do not need to be deducted again to get the balance as per the cash book.
In summary, to get the balance as per the cash book, only interest given by the bank needs to be deducted from the balance as per the passbook. Other items such as interest charged by the bank, cheques deposited but not cleared, and payments made by the bank under standing instructions do not affect the balance as per the cash book.
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If we take balance as per Pass book which of the following will be ded...
Interest given by bank will be credited in our passbook. So it means that are bank balance has increased in the pass book. In BRS we always do what has not been done or we reverse the one which is wrongly done .Here interest is credited so now we will debit it. It means that before our account was increased by certain amount so now we will decrease it.
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If we take balance as per Pass book which of the following will be deducted to get balance as per cash book :a)Interest given by bankb)Interest charged by Bankc)Cheque deposited but not clearedd)payment made by bank under standing instructionsCorrect answer is option 'A'. Can you explain this answer?
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