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CA Foundation · Accounting · Bank Reconciliation Statement

When a Bank Reconciliation Statement is prepared starting from the favourable pass book balance, how should cheques issued by the firm but not yet presented for payment be treated?

Cheques issued but not yet presented are deducted from a favourable pass book balance. The firm has already credited the bank in its cash book, while the bank has not yet paid them, so the pass book balance is higher and must be reduced to match the cash book.

  1. AAdded to the pass book balance
  2. BDeducted from the pass book balanceCorrect
  3. CIgnored, as they do not affect the pass book
  4. DAdded to the cash book balance after the statement

Explanation

Cheques issued but not yet presented have already reduced the cash book balance, but the bank has not yet deducted them. To bring the higher pass book balance down to the cash book balance, they are deducted. Adding them would move the figure in the wrong direction.

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