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

While preparing a bank reconciliation statement starting from an overdraft as per cash book of ₹10,000, which treatment is correct for a cheque deposited of ₹3,000 that has not yet been credited by the bank?

Add the uncredited cheque to the overdraft, so the pass book shows an overdraft of ₹13,000. The cash book has already recorded the deposit, reducing the overdraft, but the bank has not yet credited it, so its overdraft is higher.

  1. AAdd it to the overdraft, giving an overdraft of ₹13,000 as per pass bookCorrect
  2. BDeduct it from the overdraft, giving an overdraft of ₹7,000 as per pass book
  3. CAdd it to the overdraft, giving an overdraft of ₹7,000 as per pass book
  4. DDeduct it from the overdraft, giving an overdraft of ₹13,000 as per pass book

Explanation

The cash book has already reduced the overdraft by the ₹3,000 deposit, but the bank has not, so the pass book overdraft is larger. Overdraft per pass book = 10,000 + 3,000 = 13,000. Check: pass book overdraft 13,000 less the later credit of 3,000 gives the cash book's 10,000. The ₹7,000 options wrongly treat the deposit as already reflected by the bank.

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