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

A trader issued a cheque for Rs 8,000 to a supplier on 29 March, and it was recorded in the cash book. The supplier presented it for payment only on 3 April. On 31 March, how does this item affect the balance as per passbook compared with the cash book?

The passbook balance is higher than the cash book balance by Rs 8,000. The cheque was entered in the cash book on issue, but the bank has not debited it by 31 March, so the passbook still includes the amount. This is an unpresented cheque.

  1. APassbook balance is higher than the cash book balance by Rs 8,000Correct
  2. BPassbook balance is lower than the cash book balance by Rs 8,000
  3. CThe two balances are unaffected by this item
  4. DPassbook balance is higher by Rs 16,000

Explanation

The cash book already deducted Rs 8,000 on issue, but the bank has not yet paid it, so the passbook still shows the money. Hence the passbook balance (favourable) exceeds the cash book balance by Rs 8,000. Option B reverses the direction, and Option D doubles the amount.

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