Question

When overdraft as per pass book is the starting point, bank charges of Rs 100 recorded twice in cash book will be ___________.

• A. added by Rs 100
• B. added by Rs 200
• C. deducted by Rs 100
• D. deducted by Rs 200

Answer 1

The correct option is A added by Rs 100

Bank charges is an expense for the business and it is credited in the cash book when it is paid. Bank charges charged twice have reduced the balance in the cash book by double amount. So, when overdraft as per pass book is the starting point, Rs. 100 will be added back to negate the effect of second reduction while reconciling the differences between the two balances.