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CA Foundation · Accounting · Bank Reconciliation Statement

When a Bank Reconciliation Statement is started from the favourable (debit) balance as per the cash book, which of the following items is ADDED to reach the balance as per the pass book?

Cheques issued but not yet presented for payment are added to the favourable cash book balance. The firm has already recorded the payment, but the bank has not yet paid it, so the pass book balance is higher than the cash book balance.

  1. ACheques deposited but not yet credited by the bank
  2. BCheques issued but not yet presented for paymentCorrect
  3. CInterest credited by the bank but not yet recorded in the cash book
  4. DBank charges debited by the bank but not yet recorded in the cash book

Explanation

Cheques issued but not presented have already reduced the cash book balance, but the bank has not yet paid them, so the pass book balance is higher. They are therefore added to the cash book balance. Uncredited deposits are deducted. Interest credited and bank charges are already in the pass book, and they are not reconciling items that bridge to the pass book; they only need adjusting entries in the cash book.

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