Question

Bank charges amounting to $Rs.5,000$ 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

The correct option is A bank charges will be debited in cash book

Bank charges are first reflected in the bank pass book and only then the adjustments can be made in the cash book of the business. Since it is an outflow, it is shall be debited in the cash book i.e it shall be deducted from the available balance.