Question

If the cash book balance is taken as starting point,the items which make the cash book balance smaller than the pass book must be _____for the purpose of reconciliation.

• A. Deducted
• B. Added
• C. No effect
• D. Lower

Answer 1

Answer: (B)

Added

If the cash book balance is taken as starting point, the items which make the cash book balance smaller than the pass book must be added for the purpose of reconciliation. This is because we are trying to arrive at the balance as per pass book by taking balance as per cash book as base. In this case, items which make cash book balance smaller than the pass book, increase the balance in pass book when compared with cash book. So we have to add it to the balance of cash book to achieve pass book balance while reconciling.