Question

When balance as per Cash Book is the starting point, interest charged by Bank is ____________.

• A. added in the bank reconciliation statement
• B. subtracted in the bank reconciliation statement
• C. not required to be adjusted in the bank reconciliation statement
• D. None of the above

Answer 1

The correct option is B subtracted in the bank reconciliation statement

Interest charged by bank would lead to decrease in the bank balance but, it would not be entered in the cash book until and unless the account holder views it in his pass book.

So when the balance as per cash book is the starting, interest charged by bank is subtracted in the bank reconciliation statement to reach the pass book balance.