Which of these errors or omission are part of Bank Reconciliation?

Wrong totaling of bank column of cash book.

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Showing sale of asset as sale of trading goods.

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Both A & B.

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None of the above.

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Solution

The correct option is A Wrong totaling of bank column of cash book.
Sometimes the difference between the two balances may be accounted for by an error on the part of the bank or an error in the cash book of the business. This causes difference between the bank balance shown by the cash book and the balance shown by the bank statement. There are two types of differences by error:
(a) Errors committed in recording transactions by the firm: Omission or wrong recording of transactions relating to cheques issued, cheques deposited and wrong totaling etc. committed by the firm while recording entries in the cash book cause difference between cash book and pass book balance.
(b) Errors committed in recording transactions by the bank: Omission or wrong recording of transactions relating to cheques deposited and wrong totaling etc. committed by the bank while posting entries in the pass book also cause differences between pass book and cash book balance.
Therefore, of the given options above, only wrong totaling of bank column of cash book is considered as an error which will form a part of Bank Reconciliation Statement. Conceptual errors of treating sale of asset as sale of goods is not considered for reconciliation.

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Q. Which of the following errors/ omissions are not a part of Bank reconciliation process?

Q. Prepare double column cash book with cash and bank column from the following information:
2017
Sept. 2 Paid wages Rs. 2,000
Sept. 5 Cash sales Rs. 70,000
Sept. 20 Goods purchased by cheque Rs. 50,000

Q. Calculate Trade Receivables Turnover Ratio in each of the following alternative cases:
Case 1: Net Credit Sales ₹4,00,000; Average Trade Receivables ₹1,00,000.
Case 2: Revenue from Operations (Net Sales) ₹30,00,000; Cash Revenue from Operations, i.e., Cash Sales ₹6,00,000; Opening Trade Receivables ₹2,00,000; Closing Trade Receivables ₹6,00,000.
Case 3: Cost of Revenue from Operations or Cost of Goods Sold ₹3,00,000; Gross Profit on Cost 25%; Cash Sales 20% of Total Sales; Opening Trade Receivables ₹50,000; Closing Trade Receivables ₹1,00,000.
Case 4: Cost of Revenue from Operations or Cost of Goods Sold ₹4,50,000; Gross Profit on Sales 20%; Cash Sales 25% of Net Credit Sales, Opening Trade Receivables ₹90,000; Closing Trade Receivables ₹60,000.

Q. Cash sales of trading goods is initially recorded in ________.

State whether the following statements are TRUE or FALSE :

1. Total of payments side can be greater than total of receipts side in case of bank column.
2. Purchase of asset or stationery on credit is recorded in purchase book.
3. When goods are returned by buyer to seller, buyer sends a debit note.
4. Cheque received and deposited into bank on the same day is a contra entry.
5. Simple petty cash book is not very popular.
6. Interest on overdraft charged by bank is recorded in the cash column.
7. It is not necessary to record dishonor of cheques in the cash book.
8. Cheque book facility is available for fixed deposit account.
9. Businessman generally operates savings bank account.
10. A cash book is both a journal as well as ledger.
11. Cash book is a book of original entry.
12. Cash discount allowed is recorded on the debit side of cash book
13. Credit transactions are never recorded in cash book.
14. Endorsed cheques are always recorded on the payment side in the bank column.
15. A person who endorses the cheque is known as endorser.

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