ACCA Applied Knowledge · Financial Accounting · Cash
At 31 March, a company's cash book shows a bank balance of $4,200 debit. A comparison with the bank statement shows that bank charges of $85 have not yet been entered in the cash book. What is the adjusted cash book balance?
The adjusted cash book balance is $4,115 debit. Unrecorded bank charges reduce the bank balance, so the $85 is credited in the cash book and deducted from $4,200. Adding it instead would be a sign error.
- A$4,285 debit
- B$4,115 debitCorrect
- C$4,115 credit
- D$4,200 debit
Explanation
Bank charges are an expense paid out of the bank account, so the cash book must be credited with $85. Adjusted balance = 4,200 - 85 = $4,115 debit. Adding the charges ($4,285) is the wrong-sign error.
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