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CA Foundation · Accounting · Bank Reconciliation Statement

Starting from a favourable pass book balance, the cheque deposited by a firm but not yet credited by the bank is shown in the BRS as which of the following?

Cheques deposited but not yet credited by the bank are added to the favourable pass book balance. The cash book already includes them as receipts, while the bank has not yet recorded the credit, so the pass book balance is lower and must be increased to agree with the cash book.

  1. ADeducted from the pass book balance
  2. BAdded to the pass book balanceCorrect
  3. CAdded to the cash book balance
  4. DShown only as a note, with no effect on the balance

Explanation

The firm has already debited the bank in the cash book for the deposited cheque, but the bank has not yet credited it. The pass book balance is therefore lower than the cash book balance, so the amount is added to the pass book balance to reach the cash book balance.

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