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CA Foundation · Accounting · Bank Reconciliation Statement

Which of the following is a cause of difference between the cash book balance and the pass book balance that is a timing difference and needs NO entry in the cash book?

A cheque issued but not yet presented for payment is a timing difference. The firm has already recorded it in the cash book, while the bank will record it later. So no cash book entry is needed; it appears only in the reconciliation statement.

  1. AInterest credited by the bank on the savings balance
  2. BBank charges debited by the bank
  3. CCheque issued to a supplier but not yet presented for paymentCorrect
  4. DDirect deposit by a customer into the firm's bank account

Explanation

A cheque issued but not yet presented is already credited in the cash book; the bank will record it only when presented. It is a timing difference, so only the reconciliation statement shows it. Interest, bank charges and direct deposits are first known from the pass book and need cash book entries.

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