Question

When cheque deposited by the firm is dishonoured & entry is not made what is the effect on Cash book?

• A. The balance as per the passbook would be less than the cash book balance.
• B. The balance as per the cash book would be less than the pass book balance.
• C. The balance as per the passbook would be equals to the cash book balance.
• D. None of the above.

Answer 1

Answer: (A)

The balance as per the passbook would be less than the cash book balance.

When amount deposited either cash or cheque in bank, we have to debit the bank column of cash book and in correspondence to that bank credit our A/c when cash or cheque is deposited in bank.

In case if cheque gets dishonored bank immediately debits our A/c which is maintained in bank's A/c book which results in less balance as per passbook than cashbook balance as the same is not recorded in the cash book.