Class 11 Accountancy - Chapter Bank Reconciliation Statement NCERT Solutions | Explain the process of preparing bank re
Explain the process of preparing bank reconciliation statement with amended cash balance.
While preparing a bank reconciliation statement, under the amended cash balance approach, the balance as per cash book or as per the cash book or as per the cash book means the balance of deposits held at the bank.
Such a balance will be a credit balance as per the pass book.It is also called the favourable balance as per cash book or favourable balance as per pass book. Such a balance exists when the deposits made by the firm are more than its withdrawals. On the other hand, the credit balance as per the cash book indicates bank overdraft.In other words, the excess amount withdrawn over the amount deposited in the bank.It is also known as unfavourable balance as per cash book or unfavourable balance as per pass book.
The following steps will be followed in preparation of the bank reconciliation statement :-
i) The first step is to balance the cash book. The first item in the statement is generally the balance as shown by the cash book.Alternatively, the starting point can also be the balance as per pass book.Considering the balance as per cash book, the following further steps will be followed.
ii) The cheques deposited but not yet collected are deducted.
iii) All the cheques issued but not yet presented for payment directly deposited in the bank account are added.
iv) All the items of charges such as interest on overdraft,payment by bank on standing instructions and debited by the bank in the pass book but not entered in the cash book, bills and cheques dishonoured etc are deducted.
v) All the credits given by the bank such as interest on dividends collected etc and direct deposits in the bank are added.
vi) Adjustments for errors are made according to the interest to the principle of rectification of errors.
vii) Now, the net balance shown by the statement should be the same as shown by the pass book.
More Questions From Class 11 Accountancy - Chapter Bank Reconciliation Statement
- Q:-
Fill in the blanks :
(i) Passbook is a copy of.............as it appears in the ledger of the bank.
(ii) When money is with drawn from the bank, the bank ............. the account of the customer.
(iii) Normally, the cash book shows a debit balance, passbook shows .............balance.
(iv) Favourable balance as per the cash book means .............balance in the bank column of the cash book.
(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.
(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.
(vii) When the cheques are not presented for payment, favourable balance as per the cash book is .............than that of the passbook.
(viii) When a banker collects the bills and credits the account passbook overdraft shows .............balance.
(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.
(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. - Q:-
Favourable bank balance means:
(a) Credit balance in the cash book (b) Credit balance in passbook
(c) Debit balance in the cash book (d) Both (b) and (c) - Q:-
A bank reconciliation statement is mainly prepared for:
(a) Reconcile the cash balance of the cash book.
(b) Reconcile the difference between the bank balance shown by the cash book and bank passbook
(c) Both (a) and (b)
(d) None of these - Q:-
Passbook is a copy of:
(a) Copy of customer Account (b) Bank column of cash book
(c) Cash column of cash book (d) Copy of receipts and payments - Q:-
Unfavourable bank balance means:
(a) Credit balance in passbook (b) Credit balance in cash book
(c) Debit balance in cash book (d) None of these - Q:-
A bank reconciliation statement is prepared with the balance:
(a) Passbook (b) Cash book
(c) Both passbook and cash book (d) None of these - Q:-
Briefly explain the statement ‘wrongly debited by the bank’ with the help of an example.
- Q:-
State the need for the preparation of bank reconciliation statement?
- Q:-
State whether each of the following statements is True or False
1. Passbook is the statement of account of the customer maintained by the bank.
2. A 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.
3. Cheques issued but not presented for payment will reduce the balance as per the passbook.
4. Cheques deposited but not collected will result in increasing the balance of the cash book when compared to passbook.
5. Overdraft as per the passbook is less than the overdraft as per cash book when there are cheques deposited but not collected by the banker.
6. 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.
7. Favourable bank balance as per the cash book will be less than the bank passbook balance when there are unpresented cheques for payment.
8. Direct 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.
9. When 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. - Q:-
Briefly explain the term ‘favourable balance as per cash book’.
Popular Questions of Class 11 Accountancy
- Q:-
Name any two types of commonly used negotiable instruments.
- Q:-
Why is it necessary to record the adjusting entries in the preparation of final accounts?
- Q:-
State the meaning of incomplete records?
- Q:-
What is ‘Depreciation’?
- Q:-
Briefly state how the cash book is both journal and a ledger.
- Q:-
State the meaning of a trial balance?
- Q:-
State the four basic requirements of a database applications.
- Q:-
Define accounting.
- Q:-
State the different elements of a computer system.
- Q:-
Why is it necessary for accountants to assume that business entity will remain a going concern?
Recently Viewed Questions of Class 11 Accountancy
- Q:-
While calculating operating profit, the following are not taken into account.
(i) Normal transactions
(ii) Abnormal items
(iii) Expenses of a purely financial nature
(iv) (ii) & (iii)
(v) (i) & (iii) - Q:-
If the rent of one month is still to be paid the adjustment entry will be :
(a) Debit outstanding rent account and Credit rent account.
(b) Debit profit and loss account and Credit rent account.
(c) Debit rent account and Credit profit and loss account.
(d) Debit rent account and Credit outstanding rent account. - Q:-
Distinguish between ‘provision’ and ‘reserve’ .
- Q:- Explain the meaning of gain and profit. Distinguish between these two terms.
- Q:-
Give examples of two types of operating systems.
- Q:-
What is meant by Grouping and Marshalling of assets and liabilities. Explain the ways in which a balance sheet may be marshalled.
- Q:-
Fill in the Correct Words :
(a) Cash book is a ......... journal.
(b) In Journal proper, only......... discount is recorded.
(c) Return of goods purchased on credit to the suppliers will be entered in ...... Journal.
(d) Assets sold on credit are entered in .........
(e) Double column cash book records transaction relating to ......... and .........
(f) Total of the debit side of cash book is ......... than the credit side.
(g) Cash book does not record the ......... transactions.
(h) In double column cash book ......... transactions are also recorded.
(i) Credit balance shown by a bank column in cash book is .........
(j) The amount paid to the petty cashier at the beginning of a period is known as ......... amount.
(k) In purchase book goods purchased on ......... are recorded. - Q:-
What is a journal? Give a specimen of journal showing at least five entries.
- Q:-
Describe the informational needs of external users.
- Q:-
Who are the external users of information?
- All Chapters Of Class 11 Accountancy
- All Subjects Of Class 11