ACCA Applied Knowledge · Financial Accounting · Cash
A company's bank statement shows an overdrawn balance of $3,000. Unpresented cheques issued to suppliers total $1,200, and deposits not yet credited by the bank total $2,500. What is the balance per the cash book?
The cash book balance is $1,700 overdrawn. From the overdrawn bank statement of $3,000, deduct unpresented cheques of $1,200 and add deposits not yet credited of $2,500, giving a net overdraft of $1,700.
- A$1,700 overdrawnCorrect
- B$2,300 overdrawn
- C$3,700 overdrawn
- D$300 overdrawn
Explanation
Start with the bank statement: -3,000. Unpresented cheques reduce it further: -1,200. Outstanding deposits increase it: +2,500. Result = -3,000 - 1,200 + 2,500 = -$1,700, an overdraft of $1,700. Ignoring the unpresented cheques would give $500 overdrawn, and reversing both adjustments gives other wrong figures.
Did you get it right without looking?
One question tells you little. A timed set on Cash shows your real accuracy, how long you take and where you lose marks.
More Cash questions
- At 31 March, Linton Co's cash book shows an overdraft of $2,650. The following are then found: a customer's cheque for $480 recorded in the …
- A company's cash book shows a debit balance of $4,820. The bank statement shows a credit balance of $5,630. Comparing the two, the following…
- Which of the following is the correct double entry when a customer's cheque of $500, previously recorded as received and banked, is returned…
- When preparing a bank reconciliation, the cash book shows a debit balance of $6,500. The bank statement shows a direct debit of $400 and a d…
- Which item would appear as a cash flow from financing activities in a statement of cash flows prepared under IAS 7?
- Marlow Co's cash book shows a bank balance of $5,000 debit. The following are discovered: a customer's cheque for $640 was returned unpaid b…