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Question

Mr. Ajay has taken an insurance policy from Bajaj Life Insurance Corporation & has given instruction to bank to pay the insurance premium monthly i.e. Rs 10,000 by deducting the amount automatically from the account. The bank reconciliation statement was not prepared for 4 months by him & after 4 months the cash book & bank pass book showed a difference. What according to you could be the probability?


A

Amount in cash book is less by Rs 40,000

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B

Amount in cash book is more by Rs 40,000

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C

Amount in bank statement is more by Rs 40,000

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D

None of the above

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Solution

The correct option is B

Amount in cash book is more by Rs 40,000


Standing orders for insurance premium of Rs 10,000 would not have been entered in cash book for those four months. Therefore it must be showing a balance more by Rs 40,000 (10,000*4).


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