When a banker collects the bills and credits the amount, pass book overdraft shows ______ balance than before.

Lower

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Profit

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Higher

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None of the Above

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Solution

The correct option is C Lower
Pass book overdraft can be simply stated as debit/negative balance in the pass book. Which means the account holder has overdrawn from his account . So when a banker collects bills and credits the amount what happens is that the amount of bill is being received into the account and as a result the liability of the account holder is being reduced. Therefore, after the credit of the bill into the account the pass book overdraft would get reduced and show a lower debit balance than before.

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Similar questions

On 31st December, 2016, the cash book of Mittal Bros showed an overdraft of Rs. 6,920. From the following particulars, prepare a bank reconciliation statement and ascertain the balance as per pass book.

(i) Debited by bank Rs. 200 on account of interest on overdraft and Rs. 50 on account of charges for collecting bills.

(ii) cheque drawn but not encashed before 31st December 2016 for Rs. 4,000.

(iii) The bank has collected interest and has credited Rs. 600 in passbook.

(iv) A bill receivable for Rs. 700 previously discounted with the bank, had been dishonoured and debited in the passbook.

(v) Cheque paid into bank but not collected and credited before 31st December 2016 amounted to Rs. 6,000.

On December 31, 2010, the cash book of Mittal Bros showed an overdraft of Rs. 6,920. From the following particulars, prepare a Bank Reconciliation Statement and ascertain the balance as per pass book.

(i) Debited by the bank for Rs. 200 on account of Interest on overdraft and Rs. 50 on account of charges for collecting bills.

(ii) Cheques were drawn but not encashed before December 31, 2010, for Rs. 4,000.

(iii) The bank has collected interest and has credited Rs. 600 in passbook.

(iv) A bill receivable for Rs. 700 previously discounted with the bank had been dishonoured and debited in the passbook.

(v) Cheques paid into the bank but not collected and credited before December 31, 2010, amounted Rs. 6,000.

Q. Overdraft as per the pass book is less than the overdraft as per cash book when there are cheques deposited but not collected by the banker.

Q. On December 31, 2010, the cash book of Mittal Bros showed on overdraft of Rs.6,920. From the following particulars prepare a Bank Reconciliation Statement and ascertion the balance as per pass book.
i) Debited by bank for Rs. 200 on account of Interest on overdraft and Rs.50 on account of charges for collecting bills.
ii) Cheques drawn but not encashed before December 31, 2010 for Rs.4,000.
iii) The bank has collected interest and credited Rs. 600 in pass book.
iv) A bill receivable for Rs.700 previously discounted with the bank had been dishonoured and debited in the pass book.
v) Cheques paid into bank but not collected and credited before December 31, 2010 amounted Rs.6,000.

On December 31, 2017, the cash book of Mittal Bros. Showed an overdraft of Rs 6,920. From the following particulars prepare a Bank Reconciliation Statement and ascertain the balance as per passbook.

(1)	Debited by bank for Rs 200 on account of Interest on overdraft and Rs 50 on account of charges for collecting bills.
(2)	Cheques drawn but not encashed before December, 31 2017 for Rs 4,000.
(3)	The bank has collected interest and has credited Rs 600 in passbook.
(4)	A bill receivable for Rs 700 previously discounted with the bank had been dishonoured and debited in the passbook.
(5)	Cheques paid into bank but not collected and credited before December 31, 2017 amounted Rs 6,000.

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