Book-Keeping and Accountancy Class 11- Chapter - 6- Bank Reconciliation Statement

 Q. 1. Answer in one sentence.

1) Who prepares a Bank Pass Book?
Ans. Bank Pass Book is prepared by Bank, which is nothing but a copy or extract of ledger account of account holder appearing in the bank ledger.

2) What is Pay-in-Slip?
Ans. When the account holder deposits cheque or cash into his bank account, a slip is filled by him, which is known as Pay-In-Slip also called Deposit Slip.

3) What is Bank Overdraft?
Ans. The amount withdrawn by the current account holder in excess of the balance in his current account up to a predetermined limit decided by the bank on the basis of pre decided conditions, is known as Bank Overdraft.

4) What is Withdrawal Slip?
Ans. A form/slip which is to be filled for withdrawing money from the bank is known as Withdrawal Slip.

5) Who sends the bank statement?
Ans. Bank statement is issued by the bank to the current account holders.

6) What is a debit balance in cash book represent?
Ans. Debit balance of cash book represent bank balance as per cash book.

7) Who prepares Bank Reconciliation Statement?
Ans. Bank Reconciliation Statement is prepared by the proprietor or account holder.

8) What does debit balance in pass book represent?
Ans. Debit balance in pass book indicates bank overdraft as per pass book.

9) On which side is interest on bank deposit recorded in pass book?
Ans. Interest on bank deposit is recorded on credit side of pass book.

10) Why is Bank Reconciliation Statement prepared?
Ans. Bank Reconciliation Statement is prepared to explain the causes of disagreement between the balances shown by the cash book under bank column and the balance shown in the pass book.

Q. 2. Give the word/term or phrase which can substitute each of the following statement.

Statement	Ans.
1) The account on which overdraft facility is allowed by bank.	Current account
2) Extract of ledger account of account holder in the books of bank.	Pass Book
3) Alphanumeric code that facilitates electronic funds transfer in India.	Indian Financial System [IFSC]
4) Statement showing the causes of disagreement between balance of Cash Book and Pass Book.	Bank Reconciliation Statement [BRS]
5) Debit balance in Pass Book.	Overdraft as per pass book
6) A form which is filled for depositing cash or cheque into bank.	Pay-In-Slip
7) Left hand side of Pay-In-Slip.	Counterfoil
8) Credit balance in Cash Book.	Overdraft as per cash book
9) A Book maintained by trader to record banking transactions.	Cash book
10) Excess of bank deposits over Withdrawals by businessman in bank current account.	Bank balance (favourable balance)

Q.3. Do you agree or disagree with the following statements.

1) The bank column of Cash Book represents bank account.

Ans. Agree.

2) Bank statement enables account holder to prepare Bank Reconciliation Statement.

Ans. Agree.

3) Cheques issued for payment but not presented to bank appears in Cash Book only.

Ans. Agree.

4) Bank Reconciliation Statement is prepared only during the year end.

Ans. Disagree.

5) Bank Reconciliation Statement is similar to bank statement.

Ans. Disagree.

6) Bank balance as per Cash Book is always equal to bank balance as per Pass Book.

Ans. Disagree.

7) Bank advice is sent by the businessman to bank.

Ans. Disagree.

8) Pay-in-slip is used for depositing cheque into bank.

Ans. Agree

9) Difference in Cash Book balance and Pass Book balance may arise due to errors committed while recording.

Ans. Agree

10) Payment and receipt of cash through internet banking generates automatic proof.

Ans. Agree

Q. 4. Select the most appropriate alternative from those given and rewrite the following statements.

1. Overdraft means _______ balance of Cash Book.

a) closing b) debit c) opening d) credit

2. When a cheque is deposited and collected by bank Pass Book is _________ .

a) dishonoured b) debited c) credited d) written.

3. A __________ is a summary of financial transactions that take place over a period of time

on a bank account.

a) withdrawal slip b) bank advice c) bank statement d) Pay-in-slip.

4. Debiting an entry in Cash Book ___________ cash balance.

a) increases b) decreases c) nullifies d) none of the above.

5. Bank Reconciliation Statement is prepared by _________ .

a) student b) businessman c) bank d) none of the above.

6. Bank balance as per Pass Book means ___________ balance of Pass Book.

a) credit b) opening c) debit d) closing.

7. Bank gives overdraft facility to __________ account holder.

a) savings b) recurring c) current d) fixed.

8. Debit balance as per Cash Book is also known as ___________ balance.

a) favourable b) overdraft c) abnormal d) unfavourable.

9. When extracts of Cash Book and Pass Book are given for uncommon periods, only

________ items are considered for preparation of Bank Reconciliation Statement.

a) uncommon b) normal c) favourable d) common.

10. When extract of Cash Book and Pass Book are given for common period, only _________

items are considered for preparation of Bank Reconciliation Statement.

a) uncommon b) common c) favourable d) unfavourable.

Q.5. Complete the following statements.

1. Payments credited in Cash Book are __________ in Pass Book.

2. While preparing Bank Reconciliation Statement only __________ column of Cash Book

is considered.

3. Cheques issued to creditors appear first in ____________ book.

4. A statement showing the reasons for difference in Cash Book balance and Pass Book

balance is known as ___________ .

5. Overcast on receipt side of Pass Book means _________ in Pass Book balance.

6. Online transfer made to our creditors appear on the _________ side of Cash Book.

7. Interest on overdraft charged by bank is ____________ in Pass Book.

8. Normally the Cash Book shows debit balance and Pass Book shows ________ balance.

9. The form filled for withdrawing cash from bank is known as __________ .

10. A businessman can update his records on receiving __________ .

Answers

1) Payments credited in Cash Book are debited in Pass Book.

2) While preparing Bank Reconciliation Statement only bank column of Cash Book is considered.

3) Cheques issued to creditors appear first in cash.

4) A statement showing the reasons for difference in Cash Book balance and Pass Book balance is known as Bank Reconciliation Statement.

5) Overcast on receipt side of Pass Book means increase in Pass Book balance.

6) Online transfer made to our creditors appear on the payment] credit side of Cash Book.

7) Interest on overdraft charged by bank is debited in Pass Book.

8) Normally the Cash Book shows debit balance and Pass Book shows credit balance.

9) The form tilled for withdrawing cash from bank is known as withdrawal slip.

10) A businessman can update his records on receiving bank advice.

Q. 6. State whether the following statements are True or False with reasons.

1) Cheques deposited into bank but not yet cleared appears in the Pass Book only.

Ans. This statement is False.

Cheques deposited into bank should be recorded first on the debit side of cash book and after receiving amount by bank, bank will credit it. Thus, uncleared cheques appears in the cash book only.

2) Direct deposit made by debtors into businessman’s bank account is recorded on the credit side of pass book.

Ans. This statement is True.

As businessman is unaware of any amount directly deposited by debtors into businessman‘s bank account. He is not in a position to record it in cash book while it is already recorded on the credit side of pass book.

3) Businessman can prepare Bank Reconciliation Statement only with Cash Book balance.

Ans. This statement is False.

Bank Reconciliation Statement can be prepared with cash book balance or pass book balance or with overdraft by a businessman at the end of specified period.

4) When overdraft as per cash book is given, bank charges debited in pass book only, is to be added.

Ans. This statement is True.

When overdraft as per cash book is given. It means that it is a debt for businessman to bank and bank charges increases the debt towards bank. Therefore it is to be added in the overdraft amount.

5) Bank statement is sent by bank to businessman.

Ans. This statement is True.

As a matter of service, bank provides bank statement to account holder because bank statement is a summary of financial transactions which have taken place over a given period of time between bank and his customer.

Q.7. Draft the following specimen with imaginary name, Account Number and Amount, etc.

1) Bank statement.

With the help of bank statement, account holder is able to know the details of financial transactions with bank, which is also useful for the preparation of Bank Reconciliation Statement.

Specimen of the bank statement:

2. Pay-in-slip
3. Withdrawal slip
4. Bank Advice

5. Pass Book

Q.8. Correct and rewrite the following statements.

1. The form filled for depositing cash or cheque into bank is known as Pass Book.

2. Bank Reconciliation Statement is prepared by Bank.

3. Debit balance as per Pass Book is known as favourable balance.

4. When a cheque is deposited into Bank it is credited in Cash Book.

5. When extracts are given for common period only common items are to be considered

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PRACTICAL PROBLEMS

Q.3. On 31st August 2018 bank Pass Book of Mr. Ravi showed a credit balance of ` 33,600, but Cash Book showed a different balance. On comparing the two books following differences were noticed:

1. Cheques paid into the bank but not credited before 31st Aug 2018 amounted to ` 24,500.

2. Direct deposit by customer through NEFT ` 33,000 recorded in the Pass Book only.

3. Cheques issued on 28th Aug 2018 were presented for payment on 5th Sep. 2018 amounted

to ` 38,800.

4. A bill receivable for ` 15,000 discounted with the bank was dishonoured on 30th Aug

2018. Intimation of the same was received only on 3rd Sep 2018.

5. Pass Book credit side was overcast ` 2,000.

6. Bank debited ` 400 for bank charges in Pass Book, was not recorded in Cash Book.

Prepare Bank Reconciliation Statement as on 31st August 2018.

Q.4. From the following details prepare Bank Reconciliation Statement as on 31st Dec

2018.

1. Bank overdraft as per Cash Book on 31st Dec 2018 was ` 48,450.

2. Bank charges for SMS alerts ` 370 were debited in Pass Book but not recorded in Cash

Book.

3. Interest on overdraft ` 2,870 did not appear in Cash Book.

4. A bill for ` 12,000 discounted with bank appears in Cash Book at full amount but bank

has deducted ` 200 discounting charges.

5. Cheques issued but not presented for payment before 31st Dec 2018 amounted to `

32,300.

6. Cheques amounting to ` 24,000 deposited into bank but only a cheque of ` 8,000 was

collected by bank before 31st Dec 2018.

7. Paid stationary bill ` 11,300 by debit card. It was not recorded in Cash Book.

Q.5. From the following particulars prepare Bank Reconciliation Statement as on 30th

June 2019.

1. Credit balance as per Pass Book ` 20,000.

2. A cheque for ` 3,500was issued and paid by bank, recorded in Pass Book as ` 5,300.

3. Cheque deposited ` 9,700 collected by bank was not recorded in Cash Book.

4. Payment side of Cash Book was undercast by ` 100.

5. Electricity bill paid by bank ` 6,200 was recorded twice in Pass Book.

210

Q.6. Prepare Bank Reconciliation statement from the following information as on 31st

March, 2019.

1) Balance as per Cash Book ` 10,000.

2) Cheque of ` 2,000 issued but not presented to Bank for payment.

3) Our debtor directly deposited ` 3,500 to our Bank account by NEFT, not recorded in the

Cash Book.

4) Bank paid electricity bill on our behalf ` 450 and charged Bank charges ` 100.

5) Paid `1,500 to ABC & company, our supplier by business debit card but recorded in Cash

Book as `150.

6) Bank credited interest on Investment ` 500.

7) Cheque of ` 885 issued and presented to Bank but wrongly entered in the Pass Book as

` 865.

Q.7. On 31st January 2018 Bank balance as per Cash Book was `40,000 but Pass Book

was showing some other balance following were the causes of difference.

1) Cheques issued for `1,00,000 in January 2018 but cheques of `50,000 only presented to

Bank for payment before January 31st 2018

2) Cheques sent to Bank for collection of `2,00,000 out of which cheques of `80,000 only

credited by Bank in January 2018.

3) Following entries were shown in Pass Book in January 2018, but no corresponding entries

were made in the Cash Book.

i) Payment of `6,400 by Bank for electricity Bill by ECS.

ii) Interest credited by Bank `12,000

iii) Bank debited commission `1,000 and Bank charges for `600.

iv) Direct deposit made by customer ` 1,000 by NEFT to our account.

Prepare Bank Reconciliation statement as on 31st January, 2018.

Q.8. On January 2018, the Pass Book of Mr. Girish Kumbhar showed a bank balance of `14,000.

A comparison of the Cash Book with the Pass Book, revealed the following.

1) Cheque deposited but not credited by Bank `10,000

2) Dividend on shares collected by Bank but not recorded in the Cash Book `1,000

3) Bank paid Insurance premium as per standing instruction by ECS `500, no corresponding

entry was passed in the Cash Book.

4) Bank debited Commission `75.

5) A debit of `900 in respect of cheque dishonoured appears in Pass Book only.

6) Cheque of `1,500 deposited into Bank wrongly recorded twice in the Cash Book.

7) Total cheques of 20,000 issued during the month of January 2018, but cheques of `8,000

only were presented for payment in January 2018.

211

Q.9. Form the following details provided by Prashant enterprises, prepare Bank Reconciliation

statement as on 31st March, 2018.

1) Overdraft as per Cash Book `28,000

2) Cheque issued of `2,000 and presented to Bank returned dishonoured but the effect of

dishonoured is not recorded in the Cash Book.

3) Bank debited Bank charges `150.

4) Bank transferred `2,500 to savings account of the proprietor but not recorded in the Cash

Book.

5) Cheque issued to supplier but not presented to Bank before 21st March 2018, `1,600

6) Cheques of `3,000 and `2,000 deposited into Bank but cheque of `3,000 only credited by

Bank before 31st March 2018.

7) Out customer directly deposited `1,500 in our Bank account but wrongly recorded in the

cash column of the Cash Book.

8) Bank debited interest on overdraft `750.

Q.10. Prepare Bank Reconciliation Statement as on 31st Dec. 2018

1) Debit balance as per Pass Book `16,000

2) Customer directly deposited in our Bank account by NEFT `8,000.

3) Cheques deposited into Bank but not credited by Bank `10,500

4) Pass Book shows debit entry for Bank commission `300, not recorded in Cash Book.

5) A Bill of Exchange of `3,500 discounted with the Bank in December 2018, returned

dishonoured in January 2019.

6) As per standing instructions Bank paid Telephone bill `650, not recorded in Cash Book..

7) Cheque of `975 deposited into Bank but wrongly recorded on `795 in Cash Book.