Question

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

• 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

Answer: (C)

Bank charges will be credited in cash book.

Bank charges is an expense for the business. It is credited in the cash book when paid as it reduces the balance as per cash book. Thus, bank charges of Rs. 5000 which have not been entered in the cash book will be credited in the cash book.