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When the balance as per Pass Book is the starting point, uncollected cheques are:
- a)added in the bank reconciliation statement
- b)subtracted in the bank reconciliation statement
- c)not required to be adjusted in the bank reconciliation statement.
- d)neither of the above.
Correct answer is option 'A'. Can you explain this answer?
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When the balance as per Pass Book is the starting point, uncollected c...
Explanation:
The correct answer is A: added in the bank reconciliation statement. Here's why:
1. Bank Reconciliation Statement: The bank reconciliation statement is prepared to reconcile the differences between the bank's balance as per the passbook and the balance as per the company's records.
2. Uncollected Cheques: Uncollected cheques are the cheques issued by the company but have not yet been presented for payment at the bank.
3. Treatment in Bank Reconciliation Statement: When the balance as per the passbook is taken as the starting point, uncollected cheques need to be added to the passbook balance in the bank reconciliation statement.
4. Reason for Adding: The uncollected cheques represent the company's funds that have been deducted from the passbook balance but have not yet been debited to the company's bank account. Therefore, they need to be added back to the passbook balance to reconcile the two balances.
To summarize, uncollected cheques are added in the bank reconciliation statement when the balance as per the passbook is the starting point.
The correct answer is A: added in the bank reconciliation statement. Here's why:
1. Bank Reconciliation Statement: The bank reconciliation statement is prepared to reconcile the differences between the bank's balance as per the passbook and the balance as per the company's records.
2. Uncollected Cheques: Uncollected cheques are the cheques issued by the company but have not yet been presented for payment at the bank.
3. Treatment in Bank Reconciliation Statement: When the balance as per the passbook is taken as the starting point, uncollected cheques need to be added to the passbook balance in the bank reconciliation statement.
4. Reason for Adding: The uncollected cheques represent the company's funds that have been deducted from the passbook balance but have not yet been debited to the company's bank account. Therefore, they need to be added back to the passbook balance to reconcile the two balances.
To summarize, uncollected cheques are added in the bank reconciliation statement when the balance as per the passbook is the starting point.
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When the balance as per Pass Book is the starting point, uncollected c...
Understanding Bank Reconciliation Statement
In a bank reconciliation statement, the balance as per the passbook is adjusted to reconcile it with the balance as per the cash book. Uncollected cheques play a critical role in this process.
What are Uncollected Cheques?
- Uncollected cheques refer to cheques that have been issued by the company but have not yet been presented to the bank for payment.
- These cheques are recorded in the cash book but do not yet affect the bank’s records.
Impact on Bank Reconciliation Statement
- When starting with the balance as per the passbook, it reflects the bank's records, which do not include these uncollected cheques.
- Since these cheques have been issued and recorded in the company's cash book, they represent amounts that the company expects to receive, thus they need to be accounted for.
Why Are They Added?
- Uncollected cheques are added to the passbook balance in the bank reconciliation statement.
- This adjustment is necessary because the passbook balance does not reflect these amounts, and adding them provides a more accurate picture of the company's available funds.
Conclusion
In summary, when starting with the balance as per the passbook, uncollected cheques are added in the bank reconciliation statement to align the cash book and passbook balances accurately. This ensures that all expected cash inflows are considered, providing a clearer financial picture. Therefore, the correct answer is option 'A'.
In a bank reconciliation statement, the balance as per the passbook is adjusted to reconcile it with the balance as per the cash book. Uncollected cheques play a critical role in this process.
What are Uncollected Cheques?
- Uncollected cheques refer to cheques that have been issued by the company but have not yet been presented to the bank for payment.
- These cheques are recorded in the cash book but do not yet affect the bank’s records.
Impact on Bank Reconciliation Statement
- When starting with the balance as per the passbook, it reflects the bank's records, which do not include these uncollected cheques.
- Since these cheques have been issued and recorded in the company's cash book, they represent amounts that the company expects to receive, thus they need to be accounted for.
Why Are They Added?
- Uncollected cheques are added to the passbook balance in the bank reconciliation statement.
- This adjustment is necessary because the passbook balance does not reflect these amounts, and adding them provides a more accurate picture of the company's available funds.
Conclusion
In summary, when starting with the balance as per the passbook, uncollected cheques are added in the bank reconciliation statement to align the cash book and passbook balances accurately. This ensures that all expected cash inflows are considered, providing a clearer financial picture. Therefore, the correct answer is option 'A'.
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When the balance as per Pass Book is the starting point, uncollected cheques are:a)added in the bank reconciliation statementb)subtracted in the bank reconciliation statementc)not required to be adjusted in the bank reconciliation statement.d)neither of the above.Correct answer is option 'A'. Can you explain this answer?
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