Question

The credit balance of Rs 1,000 in the bank column of the cash book was carried forward as its debit balance. When overdraft as per pass book is the starting point, _____________.

• A. Rs 1,000 will be deducted
• B. Rs 1,000 will be added
• C. Rs 2,000 will be deducted
• D. Rs 2,000 will be added

Answer 1

The correct option is C Rs 2,000 will be deducted

Credit balance in the bank column of the cash books means that the total of the credit side of the bank column is more than the debit side, or in other words the payments made are more the receipts received. So, basically your bank column should reflect a negative balance. This happens when your bank has provided you with an overdraft facility, so to put it simply you have been provided with a short term loan by your bank. The reconciliation of the same is shown in the below table:

Particulars	Amount in Rs.
Overdraft as per pass book	$1000$
Credit balance as per cash book which is correct	$\left(1000\right)$
Difference between the two	$\left(2000\right)$

So as shown above $Rs.2000$ will be deducted.