Explanation:

When preparing a Bank Reconciliation Statement, it is important to reconcile the balances between the company's Cash Book and the bank statement. The purpose of this reconciliation is to identify any differences between the two records and ensure that the company's records are accurate and complete.

In this scenario, the question states that the Cash Book has a debit balance, meaning that there is more money recorded as being paid out than received. This could be due to various reasons such as outstanding checks or other transactions that have not yet been processed by the bank.

1. Definition of Outstanding Checks:
Outstanding checks refer to checks that have been issued by the company but have not yet been presented to the bank for payment. These checks are recorded in the Cash Book as payments but have not yet been deducted from the bank balance.

2. Treatment of Outstanding Checks:
When preparing the Bank Reconciliation Statement, outstanding checks should be added to the balance as per the Cash Book. This is because these checks have already been recorded as payments in the Cash Book but have not yet been deducted from the bank balance. Therefore, to reconcile the two balances, the outstanding checks need to be added back to the Cash Book balance.

3. Example:
Let's say the Cash Book shows a debit balance of $10,000 and there are outstanding checks amounting to $2,000. These outstanding checks should be added to the Cash Book balance, resulting in a revised Cash Book balance of $12,000. This revised balance can then be compared to the bank statement balance to identify any further differences that need to be adjusted.

4. Conclusion:
In conclusion, when preparing a Bank Reconciliation Statement and starting with a debit balance as per the Cash Book, outstanding checks should be added to the balance. This is done to account for the payments that have already been recorded in the Cash Book but have not yet been deducted from the bank balance. By reconciling these balances, companies can ensure the accuracy and completeness of their financial records.

Bank Reconciliation Statement


When preparing a Bank Reconciliation Statement, if you start with a debit balance as per the Cash Book, cheques issued but not presented within the period should be added. Here is a detailed explanation:
1. Bank Reconciliation Statement:
A Bank Reconciliation Statement is a document that compares the balances of the cash book (maintained by the company) and the bank statement (provided by the bank). It helps in identifying any discrepancies and reconciling the differences between the two balances.
2. Debit Balance as per Cash Book:
If the starting balance in the Cash Book is a debit balance, it means that the company has overdrawn or has issued more cheques than the available cash balance.
3. Cheques Issued but Not Presented:
When cheques are issued by the company but not presented to the bank within the period under consideration, these cheques are still considered as outstanding payments. They have not yet been deducted from the bank balance.
4. Treatment of Outstanding Cheques:
To reconcile the debit balance as per the Cash Book, the outstanding cheques need to be adjusted. They should be added back to the Cash Book balance because they reduce the actual bank balance available to the company.
5. Answer:
Therefore, when starting with a debit balance as per the Cash Book, the correct treatment for cheques issued but not presented within the period is to add them back. Hence, the answer is A: Added.