Bank Reconciliation Statement

Subtract ₹500 from Cash Book balance

Step 1: Bank charges are deducted from the firm's account by the bank directly — this reduces the Pass Book balance. Step 2: The firm has NOT recorded these charges in the Cash Book yet (because it gets the information later). Step 3: So Cash Book balance > Pass Book balance (Cash Book is higher because it hasn't deducted bank charges yet). Step 4: To go from Cash Book balance to Pass Book balance, we SUBTRACT ₹500. Step 5: This makes sense — the bank has already taken this money, so our actual balance (as per bank) is ₹500 less than what the Cash Book shows. Adding ₹500 (Option B) would make

₹10,500

Step 1: Start with Cash Book balance = ₹10,000. Step 2: Cheques issued but not presented → ADD ₹3,000 (Pass Book is higher because bank hasn't paid yet). Running total = ₹10,000 + ₹3,000 = ₹13,000. Step 3: Cheques deposited but not collected → SUBTRACT ₹2,000 (Cash Book is higher because bank hasn't received yet). Running total = ₹13,000 − ₹2,000 = ₹11,000. Step 4: Bank charges → SUBTRACT ₹500 (bank has deducted it, but Cash Book hasn't recorded it, so Pass Book is lower). Running total = ₹11,000 − ₹500 = ₹10,500. Step 5: Balance as per Pass Book = ₹10,500. Option B (₹11,500) results from forg

Pass Book / Bank Statement

Step 1: Every business that has a bank account has two records of banking transactions. Step 2: The FIRM maintains the 'bank column' of its Cash Book — recording all receipts and payments through the bank. Step 3: The BANK maintains an account in the customer's (firm's) name in its own ledger. Step 4: A copy of this bank-maintained account is given to the customer — this is called the Pass Book or Bank Statement. Step 5: The Cash Book is maintained by the firm (not the bank), so Option B is wrong. BRS is a reconciliation tool, not a ledger account (Option C wrong). Trial Balance is a different

Subtract ₹2,000 — Pass Book balance is less than Cash Book balance

Step 1: Standing instructions mean the firm has asked the bank to make regular payments (like insurance, rent, electricity) automatically. Step 2: When the bank makes this payment, it immediately debits (reduces) the firm's Pass Book balance. Step 3: The firm records this in the Cash Book only when it receives information — meaning the Cash Book has NOT yet recorded this ₹2,000 payment. Step 4: Result: Cash Book balance > Pass Book balance (Cash Book hasn't deducted yet, but bank has). Step 5: To arrive at Pass Book balance from Cash Book balance, we SUBTRACT ₹2,000. Option B is wrong — if Pas