Question

If we take balance as per pass book, ___________ will be deducted to get balance as per cash book.

• A. interest given by bank
• B. interest charged by bank
• C. cheque deposited but not cleared
• D. payments made by the bank under standing instructions

Answer 1

The correct option is A interest given by bank

• If balance as per pass book is the starting point then, to reach balance as per cash book interest given by bank would have to be deducted, as this entry has been recorded in the pass book but not in the cash book and the later would show a lower balance.
• In case of interest charged by bank and cheque deposited but not cleared the amount would have to be added to the passbook, whereas in case of payments made by bank under standing instructions the entry would be recorded in both the pass book and cash book as it is pre determined and so no adjustment would be required in this case.