Question

Bank charges amounting to Rs 5000 was not entered in the cash book. Identify the correct adjustment in accounts:

• A. Bank charges will be debited in cash book.
• B. Bank charges will be added to cash book balance
• C. Bank charges will be credited in cash book
• D. Bank charges need no adjustment in cash book

Answer 1

The correct option is C Bank charges will be credited in cash book

Bank charges are collected by the bank for providing various services from its customers.

It is an expense for the company which is the customer of the bank. When the company will pay such charges to the bank, its bank balance will reduce. Thus, the bank charges will be credited in the cash book.