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CMA Foundation · Fundamentals of Financial and Cost Accounting · Cash Book, Bank Book, Petty Cash Book, Bank Reconciliation Statement

A cheque issued by a trader to a supplier has been entered in the cash book but the supplier has not yet presented it to the bank. In preparing a bank reconciliation statement, this item is best described as:

It is a cheque issued but not yet presented for payment. The firm has already recorded the payment in its cash book, while the bank will deduct the amount only when the supplier presents the cheque, creating a timing difference between the two balances.

  1. AA cheque issued but not yet presented for paymentCorrect
  2. BA cheque deposited but not yet collected
  3. CInterest credited by the bank but not in the cash book
  4. DBank charges debited by the bank but not in the cash book

Explanation

The business has already credited its bank column when it issued the cheque, but the bank will reduce the balance only on presentation. This timing difference is called a cheque issued but not presented. A deposited cheque not yet collected is the opposite case, which affects the cash book debit side.

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