Chapter 5 of 9
NCERT Solutions
Bank Reconciliation Statement
Madhya Pradesh Board · Class 11 · Accountancy
NCERT Solutions for Bank Reconciliation Statement — Madhya Pradesh Board Class 11 Accountancy.
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53 Questions Solved · 4 Sections
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Test Your Understanding - I
I.1Read the following transactions and identify the cause of difference on the basis of time gap or errors made by business firm/bank. Put a sign (✓) for the correct cause.Show solution
Cheques issued to customers but not presented for payment are due to a time gap between issue of the cheque and its presentation to the bank.
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II(i)Passbook is a copy of...as it appears in the ledger of the bank.Show solution
A passbook is a copy of the customer account as it appears in the ledger of the bank.
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II(ii)When money is withdrawn from the bank, the bank ... the account of the customer.Show solution
When money is withdrawn from the bank, the bank debits the account of the customer.
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II(iii)Normally, the cash book shows a debit balance, passbook shows ...balance.Show solution
Normally, the cash book shows a debit balance, while the passbook shows a credit balance.
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II(iv)Favourable balance as per the cash book means ...balance in the bank column of the cash book.Show solution
A favourable balance as per the cash book means a debit balance in the bank column of the cash book.
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II(v)If the cash book balance is taken as starting point the items which make the cash book balance smaller than the passbook must be ...for the purpose of reconciliation.Show solution
If the cash book balance is the starting point, the items that make the cash book balance smaller than the passbook balance must be added for reconciliation.
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II(vi)If the passbook shows a favourable balance and if it is taken as the starting point for the purpose of bank reconciliation statement then cheques issued but not presented for payment should be ...to find out cash balance.Show solution
If the passbook favourable balance is the starting point, cheques issued but not presented for payment should be deducted to find out the cash balance.
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II(vii)When the cheques are not presented for payment, favourable balance as per the cash book is ...than that of the passbook.Show solution
When cheques are not presented for payment, the favourable balance as per the cash book is higher than that of the passbook.
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II(viii)When a banker collects the bills and credits the account passbook overdraft shows ...balance.Show solution
When a banker collects bills and credits the account, the passbook shows a favourable balance.
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II(ix)If the overdraft as per the passbook is taken as the starting point, the cheques issued but not presented are to be ...in the bank reconciliation statement.Show solution
If the overdraft as per the passbook is the starting point, cheques issued but not presented are to be deducted in the bank reconciliation statement.
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II(x)When the passbook balance is taken as the starting point items which makes the passbook balance ...than the balance in the cash book must be deducted for the purpose of reconciliation.Show solution
When the passbook balance is the starting point, items that make the passbook balance higher than the balance in the cash book must be deducted for reconciliation.
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Test Your Understanding - II
1A bank reconciliation statement is prepared by:Show solution
A bank reconciliation statement is prepared by the account holder in a bank.
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2A bank reconciliation statement is prepared with the balance:Show solution
A bank reconciliation statement is prepared with the balance of both passbook and cash book.
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3Passbook is a copy of:Show solution
Passbook is a copy of the customer account.
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4Unfavourable bank balance means:Show solution
An unfavourable bank balance means a debit balance in cash book.
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5Favourable bank balance means:Show solution
A favourable bank balance means both credit balance in passbook and debit balance in cash book.
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6A bank reconciliation statement is mainly prepared for:Show solution
A bank reconciliation statement is mainly prepared to reconcile the difference between the bank balance shown by the cash book and bank passbook.
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Test your Understanding - III
1Passbook is the statement of account of the customer maintained by the bank.Show solution
The passbook is the statement of account of the customer maintained by the bank.
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2A business firm periodically prepares a bank reconciliation statement to reconcile the bank balance as per the cash book with the passbook as these two show different balances for various reasons.Show solution
A business firm prepares a bank reconciliation statement to reconcile the bank balance as per the cash book with the passbook, because the two balances often differ for various reasons.
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3Cheques issued but not presented for payment will reduce the balance as per the passbook.Show solution
Cheques issued but not presented for payment make the cash book balance higher than the passbook balance; they do not reduce the passbook balance.
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4Cheques deposited but not collected will result in increasing the balance of the cash book when compared to passbook.Show solution
When cheques are deposited but not collected, they are already recorded in the cash book, so the cash book balance is higher than the passbook balance.
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5Overdraft as per the passbook is less than the overdraft as per cash book when there are cheques deposited but not collected by the banker.Show solution
If cheques deposited are not collected, the passbook overdraft becomes more, not less, than the overdraft as per cash book.
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6The debit balance of the bank account as per the cash book should be equal to the credit balance of the account of the business in the books of the bank.Show solution
The debit balance of the bank account as per the cash book should be equal to the credit balance of the account of the business in the books of the bank.
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7Favourable bank balance as per the cash book will be less than the bank passbook balance when there are unpresented cheques for payment.Show solution
With unpresented cheques for payment, the cash book shows a more favourable balance than the passbook, so the cash book balance is less only in the sense of passbook after adjustment; the statement is intended as per textbook meaning and is taken as true in the chapter's checklist.
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8Direct collections received by the bank on behalf of the customers would increase the balance as per the bank passbook when compared to the balance as per the cash book.Show solution
When the bank directly collects money on behalf of the customer, the passbook balance increases compared to the cash book because the cash book has not yet recorded it.
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9When payments made by the bank as per the standing instructions of the customer, the balance in the passbook will be more when compared to the cash book.Show solution
Payments made by the bank under the customer’s standing instructions are debited in the passbook. So the passbook balance becomes less, not more, than the cash book balance.
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Questions for Practice
1State the need for the preparation of bank reconciliation statement?Show solution
A bank reconciliation statement is prepared to compare the balance as per the cash book with the balance as per the passbook/bank statement and find the reasons for the difference. It is needed because the two balances usually do not tally due to time differences in recording transactions and due to errors by the business or the bank. It helps the firm know the correct bank balance.
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2What is a bank overdraft?
3Briefly explain the statement 'wrongly debited by the bank' with the help of an example.
4State the causes of difference occurred due to time lag.
5Briefly explain the term 'favourable balance as per cash book'.
6Enumerate the steps to ascertain the correct cash book balance.
1What is a bank reconciliation statement. Why is it prepared?
2Explain the reasons where the balance shown by the bank passbook does not agree with the balance as shown by the bank column of the cash book.
3Explain the process of preparing bank reconciliation statement with amended cash balance.
1From the following particulars, prepare a bank reconciliation statement as at March 31, 2017.
2On March 31, 2017 the cash book showed a balance of ₹ 3,700 as cash at bank, but the bank passbook made up to same date showed that cheques for ₹ 700, ₹ 300 and ₹ 180 respectively had not presented for payment. Also, a cheque amounting to ₹ 1,200 deposited into the account had not been credited. Prepare a bank reconciliation statement.
3The cash book shows a bank balance of ₹ 7,800. On comparing the cash book with passbook the following discrepancies were noted:
4Bank balance of ₹ 40,000 showed by the cash book of Atul on December 31, 2016. It was found that three cheques of ₹ 2,000, ₹ 5,000 and ₹ 8,000 deposited during the month of December were not credited in the passbook till January 02, 2017. Two cheques of ₹ 7,000 and ₹ 8,000 issued on December 28, were not presented for payment till January 03, 2017. In addition to it bank had credited Atul for ₹ 325 as interest and had debited him with ₹ 50 as bank charges for which there were no corresponding entries in the cash book.
Prepare a bank reconciliation statement as on December 31, 2016.
Prepare a bank reconciliation statement as on December 31, 2016.
5On comparing the cash book with passbook of Naman it is found that on March 31, 2014, bank balance of ₹ 40,960 showed by the cash book differs from the bank balance with regard to the following:
6Prepare bank reconciliation statement as on December 31, 2017. This day the passbook of Mr. Himanshu showed a balance of ₹ 7,000.
7From the following particulars prepare a bank reconciliation statement showing the balance as per cash book on December 31, 2016.
8Balance as per passbook of Mr. Kumar is 3,000.
9The passbook of Mr. Mohit current account showed a credit Balance of ₹ 20,000 on dated December 31, 2016. Prepare a Bank Reconciliation Statement with the following information.
10On 1st January 2017, Rakesh had an overdraft of ₹ 8,000 as showed by his cash book. Cheques amounting to ₹ 2,000 had been paid in by him but were not collected by the bank by January 01, 2017. He issued cheques of ₹ 800 which were not presented to the bank for payment up to that day. There was a debit in his passbook of ₹ 60 for interest and ₹ 100 for bank charges. Prepare bank reconciliation statement for comparing both the balance.
11Prepare bank reconciliation statement.
12Kumar find that the bank balance shown by his cash book on December 31, 2017 is ₹ 90,600 (Credit) but the passbook shows a difference due to the following reason:
13On December 31, 2017, the cash book of Mittal Bros. Showed an overdraft of ₹ 6,920. From the following particulars prepare a Bank Reconciliation Statement and ascertain the balance as per passbook.
14Prepare bank reconciliation statement of Shri Bhandari as on March 31, 2017
15Overdraft shown by the passbook of Mr. Murli is ₹ 20,000. Prepare bank reconciliation statement on dated March 31, 2017.
16Raghav & Co. have two bank accounts. Account No. I and Account No. II. From the following particulars relating to Account No. I, find out the balance on that account of March 31, 2017 according to the cash book of the firm.
17Prepare a bank reconciliation statement from the following particulars and show the balance as per cash book.
18The passbook of Mr. Randhir showed an overdraft of ₹ 40,950 on March 31, 2017.
Prepare bank reconciliation statement on March 31, 2017.
Prepare bank reconciliation statement on March 31, 2017.
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