Skip to content

CA Foundation · Accounting · Bank Reconciliation Statement

A cheque of ₹6,000 issued to a supplier was recorded in the cash book as ₹600, and the bank has paid it for ₹6,000. Which statement correctly describes the effect on the cash book balance (debit) and the required correction?

The cash book balance is overstated by ₹5,400, so the bank column must be credited with ₹5,400. The payment was entered as ₹600 instead of ₹6,000, so too little was deducted. The bank's record is correct and needs no change.

  1. AThe cash book balance is overstated by ₹5,400; credit the bank column with ₹5,400Correct
  2. BThe cash book balance is understated by ₹5,400; debit the bank column with ₹5,400
  3. CThe cash book balance is overstated by ₹6,000; credit the bank column with ₹6,000
  4. DThe cash book needs no correction because the bank paid the correct amount

Explanation

Payments were recorded at ₹600 instead of ₹6,000, so the credit was too small and the debit balance is too high by ₹5,400. The cash book must be corrected by crediting the bank column with ₹5,400. The pass book is correct.

Did you get it right without looking?

One question tells you little. A timed set on Bank Reconciliation Statement shows your real accuracy, how long you take and where you lose marks.

Practise Bank Reconciliation StatementFree diagnostic mock

More Bank Reconciliation Statement questions