Skip to content

CA Foundation · Accounting · Bank Reconciliation Statement

From the viewpoint of the business, a debit balance in the bank column of the cash book indicates which of the following, and what would the same balance be called in the pass book?

A debit balance in the cash book bank column means the firm has a favourable balance at the bank. The pass book shows the same money as a credit balance, because the bank records the amount it owes to the customer on the credit side.

  1. AFavourable bank balance; it appears as a credit balance in the pass bookCorrect
  2. BOverdraft; it appears as a credit balance in the pass book
  3. CFavourable bank balance; it appears as a debit balance in the pass book
  4. DOverdraft; it appears as a debit balance in the pass book

Explanation

The pass book is a copy of the firm's account in the bank's books, so the entries are mirror images. When the firm has money in the bank, the cash book shows a debit balance, but the bank owes the firm money and records it as a credit. Options 2 and 4 wrongly treat a debit cash book balance as an overdraft.

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