Question

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.

• A. True
• B. False

Answer 1

The correct option is B False

False. Interest charged by bank will be added when the overdraft as per cash book is taken as starting point for preparing the bank reconciliation statement. Interest charged by bank is an expense for the business which reduces the balance as per pass book. The business has not recorded this transaction in the cash book yet as it has not received any information about it. So, to arrive at the balance as per pass book, it is added to the overdraft balance as per cash book.