Accountancy for Class 11, Part 1, Chapter 5 Bank Reconciliation Statement

Learn CBSE Accountancy Index Terms for Class 11, Chapter 5 Bank Reconciliation Statement

1. Bank Reconciliation Statement – Bank reconciliation statement is a record book of the transactions of a bank account. This statement helps the account holders to check and keep track of their funds and update the transaction record that they have made. A bank reconciliation statement is also known as a bank passbook. The balance mentioned in the bank passbook of the statement must tally with the balance mentioned in the cash book. In the statement, all the deposits will be shown in the credit column and withdrawals will be shown in the debit column. However, if the withdrawal exceeds the deposit, it will show a debit balance (overdraft).

2. Bank Passbook – A bank passbook is the bank’s financial statement recorded by the bank of its client’s business transactions. The clients are given a copy of all the transactions and balances in the account with detailed information about their accounts. The bank issues separate passbooks for each client. The debit side shows the withdrawals or payments made by the clients and the credit side shows the receipts received by the clients.

3. Cheque – A cheque is a piece of document/paper that orders the bank to transfer money from the bank account of an individual or an organisation to another bank account.

The person who writes the cheque is called the ‘Drawer’ and the person in whose name the cheque has been issued is called the ‘Payee’. The amount of money that needs to be transferred, the payee’s name, date, and signature of the drawer are all mentioned in a cheque.

4. Dividends – A dividend is defined as a periodical interest payment made to an investor for holding the stocks of a company. A dividend acts as an incentive to the investor as they get a portion of the earnings of the company. These dividends get decided by the board of directors for any company and are approved by the management and shareholders. The dividends get paid to the investors at a fixed interval (be it monthly, quarterly, or yearly) with a fixed payout rate. It is also a tool to attract investors. A company pays the dividend in the form of cash or stocks.

5. Bank Overdraft – A bank overdraft is a type of financial instrument that is provided to some customers by the bank in the form of an extended credit facility, which comes into effect once the main balance of the account reaches zero.

In other words, a bank overdraft is an unsecured form of credit that is mainly used for covering short-term cash requirements.

The banks offer a credit limit to the bank customers based on their relationship with the bank. The bank levies separate interest and charges towards the non-maintenance of the account. The interest rate for the overdraft facility may vary from bank to bank.

We hope that the offered Accountancy Index Terms for Class 11 with respect to Chapter 5: Bank Reconciliation Statement, will help you.

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