Bank Reconciliation Statement — Flashcards
NIOS · Class 12 · Accountancy
20 flashcards for Bank Reconciliation Statement (NIOS Class 12 Accountancy) to test yourself on key terms and facts.
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What is a Bank Reconciliation Statement and why is it important?
Answer
A Bank Reconciliation Statement is a statement prepared to reconcile the difference between the balances shown by the bank column of the cash book and the pass book on any given date. It is important …
Define 'Pass Book' and explain its relationship with the Cash Book.
Answer
Pass Book: A Pass Book is a copy of the customer's account maintained by the bank. It shows all deposits (credit entries) and withdrawals (debit entries) recorded by the bank for that customer. Relat…
Explain the difference between favourable balance and unfavourable balance in the context of bank reconciliation.
Answer
Favourable Balance: - This is when the bank account shows a positive balance (credit balance in pass book, debit balance in cash book) - The firm has more money in the bank than what has been withdraw…
List the main reasons why the balance in the Cash Book differs from the balance in the Pass Book.
Answer
The nine main reasons for differences between Cash Book and Pass Book balances are: 1. **Cheques Issued But Not Yet Presented**: Cheques issued by the firm are immediately recorded in the cash book b…
When cheques are issued by a firm but not yet presented for payment, how does this affect the reconciliation statement?
Answer
Effect of Cheques Issued But Not Presented: **Impact on Balances:** - Cash Book Balance: REDUCED (cheque recorded as payment immediately) - Pass Book Balance: NOT YET AFFECTED (bank hasn't debited th…
Explain how cheques deposited but not yet collected affect the Bank Reconciliation Statement.
Answer
Effect of Cheques Deposited But Not Yet Collected: **Impact on Balances:** - Cash Book Balance: INCREASED (firm records deposit immediately) - Pass Book Balance: NOT YET AFFECTED (bank hasn't credite…
How do bank charges affect the Bank Reconciliation Statement and why are they significant?
Answer
Effect of Bank Charges: **Nature of Bank Charges:** Bank charges include: - Fees for services (account maintenance, overdraft facility) - Interest on overdraft balance - Commission on cheque collecti…
What is the impact of direct deposits by customers or debtors on bank reconciliation?
Answer
Effect of Direct Deposits by Customers/Debtors: **What Are Direct Deposits?** When customers or debtors deposit money directly into the firm's bank account without the firm's involvement in the depos…
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