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Direct Payments Made by Bank

Which of the ...

Question

Which of the following items appearing on a bank reconciliation would require an adjusting entry?

A

Outstanding cheques

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B

Deposits in transit

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C

Interest on balance

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D

Adjusted cash balance

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Solution

The correct option is C Interest on balance
Interest on balance would require an adjusting entry if appearing on a bank reconciliation, because outstanding cheques and deposits in transit are merely time differences which would get cleared automatically and adjusted cash balance is already taken care for the errors. Whereas interest on balance would be cleared only when an entry for the same is passed in the cash book.

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Similar questions

Q. Which of the following item is not to be appear in the Bank Reconciliation Statement if the balance as per Amended Cash Book is taken as the starting point.

Q. On a bank reconciliation which of the following would be added to the balance as per bank statement?

Q. An amount of

R s . 2, 500

is debited twice in the bank column of cash book. When credit balance as per pass book is the starting point which one of these adjustments would be done at the time of reconciliation?

Under Bank reconciliation statement, while adjusting the cash book:

Q. Bank collected dividend of Rs.

25, 000

on behalf of customer which was not recorded in cash book.
In respect the given transaction which of the following treatment is correct for preparation of bank reconciliation statement?
(I) If BRS is prepared without adjusting cash book and the balance as per cash book is starting point then Rs.

25, 000

will be subtracted.
(II) If BRS is prepared with adjusting cash book then Rs.

25, 000

will be debited to the adjusted cash book.
(III) If BRS is prepared without adjusting cash book and the balance as per cash book is starting point then Rs.

25, 000

will be added.
(IV) If BRS is prepared with adjusting cash book then Rs.

25, 000

will be credited to the adjusted cash book.
The correct answer is?

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