CA Foundation · Accounting · Bank Reconciliation Statement
Which one of the following items is an example of a timing difference that needs NO entry in the cash book while reconciling it with the pass book?
Cheques issued but not yet presented for payment need no cash book entry. They are already recorded in the cash book and the bank will debit them when presented. This is a timing difference shown only in the reconciliation statement.
- AInterest credited by the bank
- BCheques issued but not yet presented for paymentCorrect
- CDirect payment of electricity bill by the bank
- DDishonour of a customer's cheque advised by the bank
Explanation
Cheques issued but not yet presented are already recorded in the cash book and the bank will debit them later, so only the reconciliation statement shows them. The other items have been recorded by the bank but not by the firm, so the cash book must be corrected.
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