Tag: bank balance, bank overdraft, meaning, and bank reconciliation statement

Questions Related to bank balance, bank overdraft, meaning, and bank reconciliation statement

In case of an enterprise having an overdraft facility the bank reconciliation statement treats all the cheques deposited but not cleared in the cash book to be __________.

elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

  1. added

  2. deducted

  3. to be revealed only in pass book

  4. to be revealed only in cash book

Show answer
Correct Option: A
Explanation:

Overdraft facility means that the customer is allowed to withdraw money from his bank account even when the balance is zero. However, this does not affect the way in which the cheques deposited but not cleared are recorded in the cash book. Cheques deposited but not cleared are debited in the cash book (bank column). Thus, even in the case of an enterprise having overdraft facility, the bank reconciliation statement treats all the cheques deposited but not cleared as added.

Base of reconciliation statement is_______________.

elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

  1. balance shown in cash book

  2. balance shown in pass book

  3. either a or b

  4. nor a nor b

Show answer
Correct Option: C
Explanation:

Base of a reconciliation statement can either be as per cash book or bank pass book since balances of both the books are considered to know the final balance available with the business.

Bank reconciliation statement consists of all the adjustments along with the transactions recorded in bank pass book and cash book.

Bank reconciliation statement points out _______________.

elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

  1. credibility of the balance shown in pass book

  2. saving account

  3. fixed deposit account

  4. recurring deposit account

Show answer
Correct Option: A
Explanation:

A bank reconciliation statement is prepared using cash book which is prepared by the business and passbook which is prepared by the bank. When the balances of these two books are compared and reconciled, the credibility of the balances is established. Since the business prepares the cash book and the bank reconciliation statement and the passbook is prepared by the bank, the business is able to establish the credibility of the balance as per pass book which is not prepared by the business, on the basis of cash book while preparing bank reconciliation statement, which are prepared by it.

A bank reconciliation statement is a statement prepared to reconcile.

elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

  1. Cash balance as per cash book and bank balance as per pass book

  2. Bank balance as per cash book and bank balance as per pass book

  3. Both (A) & (B)

  4. None of the above

Show answer
Correct Option: B
Explanation:

A bank reconciliation statement is a statement prepared by the business to reconcile the differences in balance as per bank column in the cash book and bank balances as per pass book (bank statement). The passbook is a copy of the customer's account with the bank and it is prepared by the bank. On the other hand, cash book is prepared by the business and bank column of cash book shows all those transactions of the business which are carried out through the bank account. So it is often, that there are differences between these two balances as they are prepared by different entities with different viewpoints which is why bank reconciliation statement is required to Reconcile these differences.

How would deposits in transit be handled when reconciling the ending cash balance as per the bank statement to the correct adjusted cash balance?

elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

  1. Added to the balance as per the bank statement.

  2. Subtracted from the balance as per the bank statement.

  3. Added to the balance as per company records.

  4. Ignored.

Show answer
Correct Option: A
Explanation:

In case of deposits in transit the entry for would have been entered in the cash book due to which the cash book balance would be higher than the pass book balance.

So, while reconciling the ending cash balance as per the bank statement to the correct adjusted cash balance, deposits in transit should be added to the balance as per the bank statement.

________ is a statement which is prepared as on a particular date to reconcile the bank balance as per cash book with balance as per pass book by showing all causes of difference between the two.

elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

  1. A bank statement

  2. A bank reconciliation statement

  3. Income statement

  4. Position statement

Show answer
Correct Option: B

A bank reconciliation statement is prepared by.

elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

  1. Creditors

  2. Debtors

  3. Bank

  4. Businessman

Show answer
Correct Option: D
Explanation:

A bank reconciliation statement is prepared to show reconciliation of balances as per cash book and passbook by identifying the causes of differences between the two. It is prepared by the book keeper/ company accountant/ businessman/ customer as it is the responsibility of the business to present a true and fair picture of its books of accounts to its various stakeholders.

Which of the following is not the salient feature of bank reconciliation statement?

elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

  1. Reconciliation is done by the bankers.

  2. Reconciliation statement will help in finding the person doing any fraud.

  3. Any undue delay in the clearance of cheques will be shown up by the reconciliation.

  4. Reconciliation is done by the account holder.

Show answer
Correct Option: A
Explanation:

A bank reconciliation statement is a statement prepared by the account holder to reconcile the differences arising between the bank balances as per pass book and the cash book.

It helps to detect any undue delay in the clearance of cheques and also to find out any cases of fraud in the business.

A bank reconciliation statement is prepared by.

elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

  1. The bank

  2. The bank account holder

  3. The government

  4. The user of financial statements

Show answer
Correct Option: B
Explanation:

A bank reconciliation statement is prepared by the one who holds an account in the bank. A bank will never prepare a bank reconciliation statement but only provides with the summary of transactions undertaken by the account holder during a given period in form of a bank pass book.

A bank reconciliation statement can be prepared by.

elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

  1. Partnership firm

  2. Sole propriety concern

  3. Companies

  4. All of the above

Show answer
Correct Option: D
Explanation:

Bank reconciliation statement is prepared by p'ship firms, sole traders and companies i.e ones which have businesses.

It is an important exercise to reconcile balance between bank pass book and bank column in cash book and other cash adjustments.