The proper treatment on the bank reconciliation of an NSF cheque of a customer that is returned with the bank statement is to show it as a(an) ____.

Addition from book balance of cash

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Deduction from book balance of cash

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

Addition from bank statement balance

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Deduction from bank statement balance

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Open in App

Solution

The correct option is B Deduction from book balance of cash
When a cheque is returned on account of NSF the entry for the same would have been entered in the bank statement and so the balance would be lower than the cash book balance.
In such a case the proper adjustment with respect to reconciliation would be a deduction from cash book balance.

Suggest Corrections

Similar questions

Q. The proper treatment on the bank reconciliation of an NSF cheque of a customer that is returned with the bank statement is to show it as a(an) _________.

Q. Bank Statement of a customer shows bank balance of ₹ 62,000 on 31st March, 2019. On comparing it with the Cash Book the following discrepancies were noted:
(i) Cheques were paid into the bank in March but were credited in April:
P − ₹ 3,500; Q − ₹ 2,500; R − ₹ 2,000.
(ii) Cheques issued in March were presented in April:
X − ₹ 4,000; Q − ₹ 4,500.
(iii) Cheque for ₹ 1,000 received from a customer entered in the Cash Book but was not banked.
(iv) Pass Book shows a debit of ₹ 1,000 for bank charges and credit of ₹ 2,000 as interest.
(v) Interest on investment ₹ 2,500 collected by the bank appeared in the Pass Book.
Prepare Bank Reconciliation Statement showing the balance as per Cash Book on 31st March, 2019.

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

Q. Bank Statement of a customer shows bank balance of ₹ 62,000 on 31st March, 2018. On Comparing it with the Cash Book the following discrepancies were noted:
(i) Cheques were paid into the bank in March but were credited in April:
P–₹ 3,500; Q–₹ 2,500; R–₹ 2,000.
(ii) Cheques issued in March were presented in April:
X–₹ 4.000; Q–₹ 4,500.
(iii) Cheque for ₹ 1,000 received from a customer entered in the Cash Book but was not banked.
(iv) Pass Book shows a debit of ₹ 1,000 for bank charges and credit of ₹ 2,000 as interest.
(v) Interest on investment ₹ 2,500 collected by the bank appeared in the Pass Book.
Prepare Bank Reconciliation Statement showing the balance as per Cash Book on 31st March, 2018.

Q. The proper treatment of outstanding cheques on a bank reconciliation when balance as per cash book is the starting point is __________ .

Join BYJU'S Learning Program