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CMA Foundation · Fundamentals of Financial and Cost Accounting · Cash Book, Bank Book, Petty Cash Book, Bank Reconciliation Statement

Which of the following items would require an adjusting entry in the cash book itself, rather than only appearing as a reconciling item in the bank reconciliation statement?

Interest credited directly by the bank requires a cash book entry. The business has not recorded it, so the cash book bank column must be debited. Unpresented and uncollected cheques are already recorded in the cash book and are only timing differences.

  1. ACheque issued but not yet presented for payment
  2. BCheque deposited but not yet collected by the bank
  3. CInterest credited by the bank directly in the passbookCorrect
  4. DCheque deposited and shown in both books as collected after the date

Explanation

Interest credited by the bank is unknown to the business until the passbook is seen, so the cash book must be updated by a bank-side debit entry. Unpresented and uncollected cheques are timing differences already recorded in the cash book, and need no cash book entry.

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