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Bank Reconciliation Statement

NCERT Class 11 · Accountancy Based on NCERT Class 11 Accountancy textbook · Free CBSE study kit

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Chapter Notes

Overview
This chapter explains why the bank balance shown in a firm's cash book often differs from the balance shown in the bank passbook or statement. It introduces the Bank Reconciliation Statement (BRS) as a tool to identify and explain these differences, which arise due to timing gaps in recording transactions or errors by the business or the bank. The one big idea a student must walk away with is that the BRS is not a correction of the cash book but a reconciliation of two independent records to arrive at the true bank balance.
Key Concepts (15)
Bank Reconciliation Statement
A statement prepared to reconcile the bank balance as per cash book with the balance as per passbook or bank statement, by showing the items of difference between the two accounts.
e.g. If the cash book shows ₹50,000 but the passbook shows ₹57,600, a BRS lists items like unpresented cheques and uncredited deposits to explain the ₹7,600 difference.
Cash Book
A book of original entry that records all cash and bank transactions of the business; it serves the purpose of both the cash account and the bank account.
e.g. When a firm receives a cheque from a customer, it is immediately recorded on the debit side of the bank column in the cash book.
Passbook / Bank Statement
A copy of a bank account as shown by the bank records, provided to the customer to check funds and update their own records.
e.g. The passbook shows all deposits in the credit column and withdrawals in the debit column; a credit balance means deposits exceed withdrawals.
Favourable Balance
A debit balance in the cash book (or credit balance in the passbook) indicating that deposits made by the firm are more than its withdrawals.
e.g. If the cash book shows a debit balance of ₹10,000, it is a favourable balance meaning the firm has money in the bank.
Unfavourable Balance / Overdraft
A credit balance in the cash book (or debit balance in the passbook) indicating that withdrawals exceed deposits, meaning the firm has borrowed from the bank.
e.g. If the cash book shows a credit balance of ₹8,000, it is an overdraft — the firm owes the bank ₹8,000.
Timing Differences
Differences caused by the time gap between recording a transaction in the cash book and its recording by the bank.
e.g. A cheque issued by the firm is recorded immediately in the cash book, but the bank debits the account only when the cheque is presented for payment, which may be days later.
Cheques Issued but Not Presented for Payment
Cheques that the firm has issued and recorded in the cash book, but the recipient has not yet presented them to the bank for payment.
e.g. A firm issues a cheque for ₹6,000 to a supplier on March 28; the supplier presents it on April 5. Until then, the cash book shows a lower balance than the passbook.
Cheques Deposited but Not Yet Collected / Credited
Cheques that the firm has deposited into its bank account and recorded in the cash book, but the bank has not yet realised the amount from the payer's bank.
e.g. A firm deposits a cheque for ₹6,000 on March 31; the bank credits the account on April 3. Until then, the cash book shows a higher balance than the passbook.
Direct Debits by the Bank
Amounts deducted by the bank from the customer's account without prior intimation, such as bank charges, interest on overdraft, or cheque collection charges.
e.g. The bank debits ₹400 as bank charges; the firm only knows about it when it receives the passbook, so the cash book balance is higher than the passbook until then.
Amounts Directly Deposited in the Bank Account
Money deposited directly into the firm's bank account by debtors or other parties without the firm's immediate knowledge.
e.g. A customer directly deposits ₹8,000 into the firm's account; the bank credits it, but the firm records it only after receiving the passbook, so the passbook balance is higher.
Interest and Dividends Collected by the Bank
Interest or dividends on investments that the bank collects on behalf of the customer and credits to the account.
e.g. The bank collects ₹8,000 as dividend and credits the account; the firm records it only after seeing the passbook, causing the passbook balance to be higher.
Direct Payments Made by the Bank on Standing Instructions
Payments made by the bank on behalf of the customer as per standing instructions, such as insurance premium, rent, or telephone bills.
e.g. The bank pays ₹200 as insurance premium as per standing instructions; the firm records it only after receiving the passbook, so the passbook balance is lower.
Cheques Deposited / Bills Discounted Dishonoured
When a cheque deposited by the firm is dishonoured (bounced) or a bill of exchange discounted with the bank is dishonoured on maturity, the bank debits the customer's account.
e.g. A cheque for ₹650 received from Bhanu is dishonoured; the bank debits the account, but the firm records it only after receiving the passbook, so the passbook balance is lower.
Errors Committed in Recording Transactions by the Firm
Omission or wrong recording of transactions relating to cheques issued, cheques deposited, wrong totalling, etc., by the firm in the cash book.
e.g. A cheque of ₹5,000 issued to M/s XYZ is recorded as ₹500 in the cash book, causing a difference between cash book and passbook balances.
Errors Committed in Recording Transactions by the Bank
Omission or wrong recording of transactions relating to cheques deposited, wrong totalling, etc., by the bank in the passbook.
e.g. The bank records a cash book deposit of ₹1,589 as ₹1,598, causing a difference of ₹9.
Formulas & Equations (3)
Balance as per Cash Book + Items that increase Passbook balance - Items that decrease Passbook balance = Balance as per Passbook
Reads as: Starting with the cash book balance, add items that make the passbook balance higher and subtract items that make the passbook balance lower to get the passbook balance.
Variables: Balance as per Cash Book: Debit balance (favourable) or Credit balance (overdraft) from the cash book. Items that increase Passbook balance: e.g., cheques issued but not presented, direct deposits, interest credited. Items that decrease Passbook balance: e.g., cheques deposited but not credited, bank charges, dishonoured cheques.
Use when: When the starting point is the cash book balance and you need to find the passbook balance.
⚠ Students often add items that should be subtracted and vice versa. For example, they add cheques deposited but not credited instead of subtracting them.
Balance as per Passbook + Items that increase Cash book balance - Items that decrease Cash book balance = Balance as per Cash Book
Reads as: Starting with the passbook balance, add items that make the cash book balance higher and subtract items that make the cash book balance lower to get the cash book balance.
Variables: Balance as per Passbook: Credit balance (favourable) or Debit balance (overdraft) from the passbook. Items that increase Cash book balance: e.g., cheques deposited but not credited, bank charges, dishonoured cheques. Items that decrease Cash book balance: e.g., cheques issued but not presented, direct deposits, interest credited.
Use when: When the starting point is the passbook balance and you need to find the cash book balance.
⚠ Students confuse the treatment of items when starting from passbook versus starting from cash book. The rule is: reverse the treatment.
Overdraft as per Cash Book + Items that increase Overdraft as per Passbook - Items that decrease Overdraft as per Passbook = Overdraft as per Passbook
Reads as: Starting with the overdraft as per cash book, add items that make the passbook overdraft larger and subtract items that make it smaller to get the passbook overdraft.
Variables: Overdraft as per Cash Book: Credit balance (overdraft) in the cash book. Items that increase Overdraft as per Passbook: e.g., cheques deposited but not credited, bank charges, interest on overdraft. Items that decrease Overdraft as per Passbook: e.g., cheques issued but not presented, direct deposits.
Use when: When dealing with overdraft (unfavourable) balances and starting from the cash book.
⚠ Students treat overdraft as a negative number and get confused with addition and subtraction. It is safer to treat overdraft as a positive figure and apply the rules carefully.
How It Works
Preparation of Bank Reconciliation Statement (Starting from Cash Book Balance – Favourable)
  1. Step 1: Write the date and heading: 'Bank Reconciliation Statement as on [date]'.
  2. Step 2: Write the balance as per cash book as the first item (debit balance = favourable).
  3. Step 3: Add all items that increase the passbook balance but are not yet in the cash book: cheques issued but not presented for payment, amounts directly deposited by customers, interest and dividends collected by the bank.
  4. Step 4: Subtract all items that decrease the passbook balance but are not yet in the cash book: cheques deposited but not yet credited by the bank, bank charges, direct payments made by the bank (e.g., insurance premium), dishonoured cheques, interest on overdraft.
  5. Step 5: Adjust for errors: if an error in the cash book makes the cash book balance higher than it should be, subtract; if it makes it lower, add. If an error in the passbook makes the passbook balance higher, subtract; if lower, add.
  6. Step 6: The resulting figure should equal the balance as per passbook.
💡 The treatment of items is opposite when starting from the passbook balance. For example, cheques issued but not presented are added when starting from cash book, but subtracted when starting from passbook.
Preparation of Bank Reconciliation Statement (Starting from Cash Book Balance – Overdraft/Unfavourable)
  1. Step 1: Write the date and heading.
  2. Step 2: Write the overdraft as per cash book (credit balance) as the first item.
  3. Step 3: Add items that increase the overdraft as per passbook (make it larger): cheques deposited but not yet credited, bank charges, interest on overdraft, dishonoured cheques, direct payments by bank.
  4. Step 4: Subtract items that decrease the overdraft as per passbook (make it smaller): cheques issued but not presented for payment, amounts directly deposited, interest credited by bank.
  5. Step 5: Adjust for errors similarly.
  6. Step 6: The resulting figure should equal the overdraft as per passbook.
💡 When dealing with overdraft, think of it as a debt. Adding items that increase the debt (like bank charges) makes the overdraft larger. Subtracting items that reduce the debt (like direct deposits) makes the overdraft smaller.
Preparation of Bank Reconciliation Statement (Starting from Passbook Balance – Favourable)
  1. Step 1: Write the date and heading.
  2. Step 2: Write the balance as per passbook (credit balance = favourable) as the first item.
  3. Step 3: Add items that increase the cash book balance but are not yet in the passbook: cheques deposited but not yet credited, bank charges, direct payments by bank, dishonoured cheques, interest on overdraft.
  4. Step 4: Subtract items that decrease the cash book balance but are not yet in the passbook: cheques issued but not presented for payment, amounts directly deposited, interest and dividends collected by bank.
  5. Step 5: Adjust for errors.
  6. Step 6: The resulting figure should equal the balance as per cash book.
💡 This is the reverse of starting from cash book. Students often mix up the treatment. A simple rule: whatever you added when starting from cash book, you subtract when starting from passbook, and vice versa.
Preparation of Bank Reconciliation Statement (Starting from Passbook Balance – Overdraft/Unfavourable)
  1. Step 1: Write the date and heading.
  2. Step 2: Write the overdraft as per passbook (debit balance) as the first item.
  3. Step 3: Add items that increase the overdraft as per cash book: cheques issued but not presented for payment, amounts directly deposited, interest credited by bank.
  4. Step 4: Subtract items that decrease the overdraft as per cash book: cheques deposited but not yet credited, bank charges, interest on overdraft, direct payments by bank, dishonoured cheques.
  5. Step 5: Adjust for errors.
  6. Step 6: The resulting figure should equal the overdraft as per cash book.
💡 Again, this is the reverse of starting from cash book with overdraft. Practice with both starting points to avoid confusion in the exam.
Exam Traps — Don't Make These Mistakes
⚠ Confusing treatment of cheques issued but not presented
✗ Students often subtract cheques issued but not presented when starting from cash book balance.
→ Cheques issued but not presented mean the cash book has already recorded the payment, but the bank has not yet deducted it. So the passbook balance is higher than the cash book balance. Therefore, when starting from cash book, you must ADD these cheques to reconcile to the passbook.
✓ When starting from cash book (favourable balance), ADD cheques issued but not presented for payment.
⚠ Mistaking overdraft treatment
✗ Students treat overdraft as a negative number and apply the same addition/subtraction rules as for favourable balances.
→ Overdraft is a credit balance in cash book and a debit balance in passbook. The logic of addition and subtraction reverses. For example, cheques deposited but not credited increase the overdraft (make it larger), so they are ADDED when starting from cash book overdraft.
✓ For overdraft, think: items that increase the debt (bank charges, uncredited deposits) are added; items that decrease the debt (unpresented cheques, direct deposits) are subtracted.
⚠ Ignoring errors in the cash book or passbook
✗ Students only consider timing differences and forget to adjust for errors like wrong totalling, double recording, or wrong carry forward.
→ Errors are a separate cause of difference. For example, if a cheque of ₹250 is recorded as ₹205 in the cash book, the cash book balance is lower by ₹45. This must be adjusted in the BRS.
✓ Always check for errors mentioned in the question. Rectify them by adding or subtracting the difference to the starting balance appropriately.
⚠ Confusing direct deposits and direct payments
✗ Students treat direct deposits by customers and direct payments by bank (like insurance premium) in the same way.
→ Direct deposits increase the passbook balance (so they are added when starting from cash book). Direct payments decrease the passbook balance (so they are subtracted when starting from cash book). They have opposite effects.
✓ Direct deposits: ADD when starting from cash book. Direct payments (standing instructions): SUBTRACT when starting from cash book.
⚠ Not distinguishing between 'cheques deposited but not credited' and 'cheques recorded but not deposited'
✗ Students treat both as the same item and subtract them in the same way.
→ 'Cheques deposited but not credited' means the cheque is with the bank but not yet realised — it affects the passbook balance. 'Cheques recorded in cash book but not sent to bank' means the cheque is still with the firm — it affects the cash book balance. The treatment differs.
✓ For 'cheques deposited but not credited': subtract from cash book balance. For 'cheques recorded but not sent to bank': add to cash book balance (or treat as a deduction from passbook balance).
Compare & Contrast
Who maintains the record
Cash Book
Passbook
The cash book is maintained by the business firm; the passbook is maintained by the bank.
Nature of balance
Favourable Balance as per Cash Book
Favourable Balance as per Passbook
A favourable balance as per cash book is a debit balance; a favourable balance as per passbook is a credit balance. Both indicate that deposits exceed withdrawals.
Effect on reconciliation when starting from cash book
Cheques Issued but Not Presented
Cheques Deposited but Not Credited
Cheques issued but not presented are ADDED to the cash book balance; cheques deposited but not credited are SUBTRACTED from the cash book balance.
Exam Focus
Marks pattern: Typically 1-2 MCQs (1 mark each), 1 short answer question (3 marks) on causes of difference, and 1 long answer/numerical question (5-6 marks) on preparation of BRS. Total: 8-10 marks.
Most asked: Preparation of Bank Reconciliation Statement from given particulars (both favourable and overdraft balances) · Identifying causes of difference between cash book and passbook balances · Treatment of cheques issued but not presented and cheques deposited but not credited · Adjustment for errors in cash book or passbook
Don't skip: Numerical question on preparing BRS with both favourable and overdraft balances, including errors and timing differences (5-6 marks); Question asking to identify and explain causes of difference (3 marks)
One-Line Revision (read aloud before the exam)
  1. Bank Reconciliation Statement reconciles the bank balance as per cash book with the balance as per passbook.
  2. Differences arise due to timing gaps and errors by the business or the bank.
  3. Cheques issued but not presented for payment are added to the cash book balance when starting from cash book.
  4. Cheques deposited but not credited by the bank are subtracted from the cash book balance when starting from cash book.
  5. Direct deposits by customers and interest credited by the bank increase the passbook balance.
  6. Bank charges, interest on overdraft, and direct payments by bank decrease the passbook balance.
  7. An overdraft is a credit balance in the cash book and a debit balance in the passbook.
  8. When starting from passbook, the treatment of all items is reversed compared to starting from cash book.
  9. Errors in the cash book, such as wrong totalling or double recording, must be adjusted in the BRS.
  10. Errors in the passbook, such as wrong credit or wrong carry forward, must also be adjusted.
  11. The BRS is not a part of the double-entry system; it is a statement for reconciliation only.
  12. A favourable balance as per cash book means a debit balance; a favourable balance as per passbook means a credit balance.
  13. Unfavourable balance (overdraft) as per cash book means a credit balance; as per passbook, it means a debit balance.
  14. The BRS can be prepared with two amount columns: one for additions (+) and one for deductions (-).
  15. Always check the starting point given in the question — cash book or passbook — and apply the correct treatment.

MCQs — 10 Questions with Answers

Q1. Which of the following causes a difference between cash book and passbook balance due to timing?

  • A. Cheques issued but not yet presented for payment ✓
  • B. Arithmetic error in recording a cheque amount
  • C. Firm recording a transaction twice in cash book
  • D. Wrong classification of an expense

Answer: A — Option A is a natural timing difference; the firm records the cheque immediately but the bank records it only when presented, causing a temporary difference.

Q2. When cheques are deposited in the bank but not yet credited, they should be:

  • A. Added to cash book balance
  • B. Subtracted from cash book balance ✓
  • C. Added to passbook balance
  • D. Left unchanged in reconciliation

Answer: B — The firm recorded these cheques in the cash book but the bank has not yet cleared them, so we subtract to reconcile the cash book to the lower passbook balance.

Q3. Bank charges deducted by the bank are discovered only when the statement arrives. These should be:

  • A. Added to cash book balance in reconciliation
  • B. Subtracted from cash book balance in reconciliation ✓
  • C. Ignored as they are the bank's responsibility
  • D. Added to passbook balance

Answer: B — Bank charges reduce the actual bank balance but were not recorded in the cash book, so we subtract them to reconcile the cash book downward to the passbook balance.

Q4. When interest is credited directly by the bank to the firm's account, the firm comes to know only through the bank statement. This should be treated as:

  • A. Subtracted from cash book balance
  • B. Added to cash book balance in reconciliation ✓
  • C. Subtracted from passbook balance
  • D. Ignored in reconciliation

Answer: B — Interest credited by the bank increases the passbook balance but was not recorded in the cash book, so we add it to the cash book balance in reconciliation to make them equal.

Q5. A firm's cash book shows a balance of ₹50,000 on 30th September. The bank passbook shows ₹48,000 on the same date. Cheques issued but not presented amount to ₹4,000. The difference is caused by:

  • A. Only cheques not yet presented
  • B. Cheques not presented plus other items like bank charges or cheques not credited ✓
  • C. An error in the firm's cash book
  • D. An error in the bank's records

Answer: B — The ₹2,000 difference (₹50,000 – ₹48,000) is not fully explained by the ₹4,000 cheques issued; other items like bank charges or cheques not yet credited must also exist.

Q6. Which statement is NOT correct regarding bank reconciliation?

  • A. Timing differences cause temporary discrepancies between cash book and passbook
  • B. Cheques issued but not presented should always be added to cash book balance
  • C. Bank charges should be deducted from passbook balance to get cash book balance ✓
  • D. Direct deposits by customers increase the passbook balance but are unknown to the firm initially

Answer: C — Option C is wrong because bank charges are deducted from cash book balance (not passbook) to reconcile toward the lower passbook balance in the reconciliation statement.

Q7. A bank statement is a document that shows:

  • A. Only deposits and withdrawals recorded by the firm
  • B. All deposits in the credit column and withdrawals in the debit column as per bank's records ✓
  • C. Only cheques that have been presented
  • D. The firm's accounting records

Answer: B — A bank statement is the bank's copy of the account showing deposits as credits and withdrawals as debits, providing the customer with an independent record of transactions.

Q8. If the passbook shows a credit balance, it means:

  • A. The firm has an overdraft
  • B. Deposits exceed withdrawals and the firm has funds in the bank ✓
  • C. The bank has made an error
  • D. All cheques have been presented

Answer: B — A credit balance indicates deposits exceed withdrawals, meaning the firm has a positive balance available in the bank account.

Q9. Cash book balance is ₹30,000. Cheques issued but not presented: ₹5,000. Cheques deposited but not credited: ₹2,000. Bank charges not recorded: ₹500. The passbook balance should be:

  • A. ₹32,500 ✓
  • B. ₹27,500
  • C. ₹26,500
  • D. ₹30,000

Answer: A — Passbook balance = ₹30,000 (cash book) + ₹5,000 (cheques not presented) − ₹2,000 (cheques not credited) − ₹500 (bank charges) = ₹32,500.

Q10. When a customer deposits money directly into the firm's bank account, the firm's cash book shows the balance as less than the passbook balance because:

  • A. The firm recorded the deposit before the bank
  • B. The bank recorded the deposit but the firm has not yet recorded it ✓
  • C. An error was made by both the firm and the bank
  • D. The passbook balance is always incorrect

Answer: B — Direct customer deposits are credited by the bank immediately but the firm remains unaware until the bank statement arrives, causing the passbook to show more than the cash book.

Flashcards

What is a bank reconciliation statement?

A statement that explains and reconciles the difference between the cash book balance and the bank passbook balance on a specific date.

Why does the bank balance in the cash book differ from the passbook?

Due to timing differences in recording transactions and errors made by either the firm or the bank.

When cheques are issued but not yet presented for payment, how do we treat them in reconciliation?

Add them to the cash book balance because the firm recorded them early but the bank has not yet debited them.

When cheques are deposited but not yet credited by the bank, how do we treat them?

Subtract them from the cash book balance because the firm recorded them but the bank has not yet credited them.

What is a timing difference in bank reconciliation?

A difference caused by the time gap between when a transaction is recorded in the cash book and when it is processed by the bank.

How should bank charges be treated in the bank reconciliation statement?

Subtract them from the cash book balance because the bank deducts them from the account without the firm's prior knowledge.

When the bank credits interest directly to the account, what adjustment is needed?

Add it to the cash book balance in the reconciliation statement because the firm has not recorded it in its cash book.

What does a credit balance in the passbook indicate?

The bank account has funds available because deposits exceed withdrawals.

What does a debit balance (overdraft) in the passbook mean?

The firm has withdrawn more money than it has deposited, meaning the account is overdrawn.

Why is it important to obtain a recent bank statement for reconciliation?

To ensure the comparison between the cash book and passbook is current and all transactions are accounted for.

Important Board Questions

Define bank reconciliation statement and state why it is necessary. [2 marks]

State it as a statement that explains differences between cash book and passbook balances. Mention it is necessary to verify accuracy, identify errors, and ensure control over bank transactions.

A firm's cash book on 31st March 2024 shows a balance of ₹50,000. On the same date, the bank passbook shows ₹47,500. Investigation reveals: (a) Cheques issued but not presented: ₹6,000 (b) Cheques deposited but not credited: ₹4,000 (c) Bank charges deducted: ₹1,500. Prepare the bank reconciliation statement and verify if the balances reconcile. [5 marks]

Start with cash book balance of ₹50,000. Add cheques issued not presented (₹6,000). Subtract cheques not credited (₹4,000) and bank charges (₹1,500). Check if result equals ₹47,500. Show all steps in the standard reconciliation format.

Explain with examples the various timing differences that cause discrepancies between the cash book balance and the bank passbook balance. How does the bank reconciliation statement help in resolving these differences? [6 marks]

Discuss cheques issued not presented, cheques deposited not cleared, direct bank debits (charges), direct customer deposits, and interest collected by bank. For each, explain why it creates a time gap. Then explain how the reconciliation statement adjusts the cash book balance to equal the passbook balance by adding or subtracting these items, thereby proving the accuracy of both records and identifying any true errors.

Assertion-Reason Questions for Bank Reconciliation Statement

Q1. Assertion (A):

A bank reconciliation statement is essential because the balance shown in the firm's cash book and the bank passbook are rarely identical on any given date.

Reason (R):

The differences arise primarily due to timing gaps in the recording of transactions such as cheques issued but not presented and cheques deposited but not credited.

Answer: A — Both A and R are true, and R is the correct explanation of A — Both the assertion and reason are true, and the reason directly explains why reconciliation is necessary—timing differences create temporary discrepancies that must be identified and explained through reconciliation.

Q2. Assertion (A):

When the bank deducts service charges from the firm's account without intimation, the bank passbook balance will be lower than the cash book balance.

Reason (R):

Bank charges represent an expense that should have been recorded in the firm's cash book, but since the firm is unaware of them initially, it continues to show the higher balance.

Answer: A — Both A and R are true, and R is the correct explanation of A — Both statements are true, and the reason correctly explains the assertion. Unrecorded bank charges reduce the passbook balance relative to the cash book, creating a difference that must be reconciled.

Q3. Assertion (A):

Cheques issued by the firm but not yet presented for payment are added to the cash book balance when preparing a bank reconciliation statement.

Reason (R):

Because these cheques reduce the cash book balance at the time of issue, but the bank hasn't yet deducted them, so the bank's balance is actually higher than the cash book.

Answer: A — Both A and R are true, and R is the correct explanation of A — Both the assertion and reason are correct. Unissued cheques must be added back to the cash book balance when reconciling to the bank statement because they haven't affected the bank's records yet.

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Case-Based Questions (CBQ) for Bank Reconciliation Statement

Case Study:

Apex Electronics, a Mumbai-based dealer, maintains a triple-column cash book. On 31st March 2025, the cash book showed a debit balance of ₹1,50,000. The bank statement received from HDFC Bank on the same date showed a credit balance of ₹1,82,000. Upon comparison, the accountant found that a cheque of ₹32,000 issued to a supplier had not yet been presented for payment by the bank.

Q1. What is the primary reason for the difference between the cash book balance and the bank statement balance in this scenario?

  • A. The bank has charged an interest on overdraft not recorded in the cash book
  • B. A cheque issued by Apex Electronics has not yet been presented for payment ✓
  • C. The cash book has been incorrectly totalled
  • D. The bank statement has an error in recording a deposit

Answer: B

Q2. When preparing the Bank Reconciliation Statement as on 31st March 2025, starting with the cash book balance (debit), how should the accountant treat the unpresented cheque of ₹32,000?

  • A. Add ₹32,000 to the cash book balance
  • B. Subtract ₹32,000 from the cash book balance ✓
  • C. Add ₹32,000 to the bank statement balance
  • D. Ignore it as it is already recorded in both books

Answer: B

Q3. If the accountant starts the Bank Reconciliation Statement with the bank statement credit balance of ₹1,82,000, what adjustment is needed for the unpresented cheque?

  • A. Add ₹32,000 to ₹1,82,000
  • B. No adjustment is needed as it is a timing difference
  • C. Add ₹32,000 to the cash book balance
  • D. Subtract ₹32,000 from ₹1,82,000 ✓

Answer: D

Q4. After correctly reconciling, what will be the reconciled balance as per the cash book?

  • A. ₹1,50,000 ✓
  • B. ₹1,82,000
  • C. ₹1,18,000
  • D. ₹2,14,000

Answer: A

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