ACCA Applied Knowledge · Financial Accounting · Cash
At 31 March, the cash book of Larkspur Ltd shows a bank balance of $8,400 debit. The bank statement shows bank charges of $150 and a direct debit for insurance of $600, neither of which is yet in the cash book. What is the adjusted cash book balance?
The adjusted cash book balance is $7,650. Bank charges and direct debits not yet recorded are payments, so both are deducted from the cash book balance of $8,400: 8,400 minus 150 minus 600 equals 7,650.
- A$7,650Correct
- B$8,550
- C$9,150
- D$7,800
Explanation
Both items are payments that reduce the bank balance: 8,400 - 150 - 600 = 7,650. $8,550 adds the charges instead of deducting. $9,150 adds both. $7,800 deducts only the insurance and ignores the charges, or $8,400 - 600.
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