Interest charged by the bank will be deducted when the overdraft as per pass book is the starting point for preparing the bank reconciliation statement to arrive at the balance as per cash book at the end.

True

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False

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Solution

The correct option is A True
True. Interest charged by bank is an expense for the business. It is credited in the cash book when it is paid by the business, thereby reducing the balance in the cash book (bank column). So, when overdraft as per pass book is the starting point for preparing bank reconciliation statement, interest charged by bank will be deducted to arrive at the balance as per cash book at the end.

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Similar questions

Q. Interest charged by the bank will be deducted, when the overdraft as per the cash book is made the starting point for making, the bank reconciliation statement.

State whether the following Statements are True or False.

1) Bank Reconciliation Statement is prepared by Bank.
2) Bank Reconciliation Statement is prepared at the end of stipulated period.
3) Overdraft facility is allowed to proprietors personal account
4) Debit balance of Pass Book represents overdraft
5) Credit balance of Bank column of Cash Book represents the balance as per Cash book.
6) Bank charges debited by Bank increases bank balance in the Pass Book.
7) Interest credited in Pass Book is an income to the Customer.
8) Bank Reconciliation Statement is prepared to detect the errors the takes place in accounting

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