Question

While preparing bank reconciliation statement, cheques deposited into bank but not yet cleared are _________.

• A. added to the balance as per cash book to arrive at the balance as per pass book
• B. deducted to the balance as per cash book to arrive at the balance as per pass book
• C. divided to the balance as per cash book to arrive at the balance as per pass book
• D. multiplied to the balance as per cash book to arrive at the balance as per pass book

Answer 1

The correct option is B deducted to the balance as per cash book to arrive at the balance as per pass book

When firm receives cheques from its customers (debtors), they are immediately recorded in the debit side of the cash book. This increases the bank balance as per cash book, but clearing of cheque generally takes few days. This leads to a cause of difference between the bank balance shown by the cash book and the balance shown by the passbook. Therefore, such amount of cheque should be deducted from the balance of cash book to arrive at the balance as per pass book.