Regular practice with AP Inter 1st Year Accounts Study Material Chapter 9 Bank Reconciliation Statement Questions and Answers helps students stay prepared for examinations.
AP Inter 1st Year Accountancy 9th Lesson Bank Reconciliation Statement Questions and Answers
I. Fill in the blanks
Question 1.
A passbook is a copy of a ……. as it appears in the ledger of the bank.
Answer:
Customer account
Question 2.
When money is withdrawn from the bank, the bank ……. the account of the customer.
Answer:
Debits
Question 3.
Normally, the cash book shows a debit balance, while passbook shows a …….. balance.
Answer:
Credit
Question 4.
Favourable balances as per the cash book mean balance in the bank column of the cash ………………… book.
Answer:
Debit
Question 5.
If the cash book balance is taken as a starting point the items which make the cash book balance smaller than the passbook must be …………. for reconciliation.
Answer:
Added
Question 6.
If the passbook shows a favourable balance and if it is taken as the starting point for a bank reconciliation statement then cheques issued but not presented for payment should be ……. to find out the cash balance. Answer:
Deducted
Question 7.
When the cheques are not presented for payments, a favourable balance as per the cash book is …. than that of the passbook.
Answer:
Less
Question 8.
If the overdraft as per the passbook is taken as a starting point, the cheques issued but not presented are to be …… to the bank reconciliation statement.
Answer:
Added
Question 9.
When the passbook balance is taken as the starting point item which makes the passbook balance …. than the balance in the cashbook must be deducted for reconciliation.
Answer:
Higher
II. Very Short Answer Type Questions
Question 1.
What is meant by Bank Reconciliation Statement ?
Answer:
Bank Reconciliation Statement is a statement prepared to reconcile the difference between the balances as per the bank column of the cash book and the passbook on any given date.
Question 2.
What do you mean by Favourable Balance ?
Answer:
It means cash book shows debit balance at the same time passbook shows credit balance. Favourable balance means our money is in the Bank Account. Hence cash book debit balance and pass book credit balance is called favourable balance.
Question 3.
What do you mean by Unfavourable Balance ?
Answer:
Sometimes a businessman withdraws excess amount from the bank account and the closing bank balance of a month is a debit balance. This balance amount is called unfavourable balance or overdraft balance.
Question 4.
Describe the Overdraft.
Answer:
When withdrawals exceed deposits, cash book bank column shows credit balance and the passbook shows debit balance. It is called unfavourable or overdraft balance. Sometimes businessman is allowed by the bank to withdraw the amount, in excess of what he has in his bank account after moving prior agreement with banker. This facility is called overdraft.
III. Essay Answer Type Questions
Question 1.
Explain the nature and importance of the Bank Reconciliation Statement.
Answer:
A statement prepared to reconcile the balance of cash book and pass book is called the ‘Bank Reconciliation Statement’.
Generally the business concerns would like to maintain an account with a bank and prepare a Bank Reconciliation Statement.
Importance :
- Locating the mistakes or errors either side of both cash book and passbook.
- Preventing any fraud and misappropriations.
- Enabling the business concern to get up-to-date record of transactions from the bank.
- Ensuring a proper evidence of payment.
- Help to know exact cash balance at bank.
Question 2.
Enumerate the reasons for differences between the balance shown in the Cash Book and Passbook.
Answer:
I. Items entered in the bank columns of the Cash Book, but not entered in Pass Book or bank statement.
- Cheques sent for collection, but not collected by the bank. This will appear only on the debit side of the cash book.
- Cheques issued but not yet presented for payment. This appears only on credit side of the cash book.
II. Items entered in the bank statement or bank Pass Book, but not in Cash Book :
- Direct payment into the bank by a customer. This appears only on the credit side of the bank statement.
- Bank charges : Charges paid by the business for using some of the bank services. This will appear on the debit side of the passbook.
- When the business instructs the bank to make regular payments of fixed amounts, rent, insurance premium, etc. These will appear on the debit side of the bank statement.
- Interest on overdrafts or loans appears on the debit side of the bank statement.
- Interest on deposits appears on the credit side of the bank statement.
- Dishonour of cheques and bills – first appears on the debit side of the bank statement. But the firm records the same when it receives the information from the bank. As a result, the balance as per cash book and that of pass book will differ.
III. Difference caused by Errors :
- Errors committed in recording transactions by the firm in cash book : Omission of transaction, wrong recording, wrong totaling, over / under casting, etc.
- Errors committed in recording transactions by the bank : Sometimes bank may also commit errors. E.g. Omission or wrong recording of transaction, wrong totaling, over/under casting, etc.
Problems
Question 1.
On comparing the Bank Pass Book of ABC Ltd., with the Cash Book (Bank Column), the following differences were noticed. Prepare BRS with the help of Cash Book Balance 15,000.
a) Cheque sent for collection, not yet realized ₹ 5,600
b) Cheques issued but not yet presented for payment ₹ 4,200
c) The receipts side of Cash Book has been overcast by ₹ 300.
d) A cheque drawn on firm’s current a/c, wrongly debited in its savings a/c ₹ 2,100.
[Ans: Balance as per Pass Book 15,400]
Solution:
Bank Reconciliation statement of BBR Ltd
Question 2.
Sunil’s Cash Book shows a favourable balance of ₹ 25,500 as on 31st December, 2023. On comparing the same with his Pass Book the following differences were noticed. Calculate the bank balance as per Pass Book.
a) A cheque for ₹ 2,450 received from Saritha & Co., was entered twice in the Cash Book.
b) The receipts column of the Cash Book has been over added by 1940.
c) Several cheques, totalling Rs. 6,000 were issued to different suppliers. Of these, cheques worth 1,500 were debited in the Pass Book on 2nd January, 2024 and ₹ 2,500 on 4th January 2024. The remaining amount being debited before 31st December, 2023.
d) A cheque of Rs. 400 was credited in Pass Book, but was not recorded in Cash Book.
[Ans: Balance as per Pass Book ₹ 25,510]
Solution:
Bank Reconciliation statement of Sunil as on 31st December 2023
Question 3.
Prepare a Bank Reconciliation Statement of PQR & Sons as on 31-03-2023.
a) Balance as per Cash Book ₹ 14,500
b) Cheques issued but not yet presented for payment ₹ 4,500
c) Directly deposited by a Customer in our bank account ₹ 3,500.
d) Cheques deposited in bank but not credited ₹ 7,500.
e) Interest debited in the pass book only ₹ 500.
[Ans: Balance as per Pass Book ₹ 14,500]
Solution:
Bank Reconciliation statement of PQR & Sons as on 31-03-2023
Question 4.
Pass Book of a trader shows a balance of ₹ 12,600. On Comparing the Pass Book with the Cash Book, the following discrepancies were noted. Prepare BRS
a) Cheques deposited in bank but not collected ₹ 2,100.
b) Cheques issued but not presented for payment ₹ 1,800
c) Bank paid insurance premium ₹ 1,500.
d) The debtor paid directly into bank account ₹ 1,200.
[Ans: Balance as per Cash Book 13,200]
Solution:
Question 5.
Paparao and Son’s Pass Book showed a balance of ₹ 21,700 as on 30th September, 2023. On comparing the Cash Book the following discrepancies were noted.
a) Cheques issued but not yet presented for payment ₹ 2,500.
b) Interest credited by bank is found in Pass Book only ₹ 575.
c) Cheques deposited in bank but not credited ₹ 3,500.
d) Bank charges ₹ 150.
Prepare BRS to ascertain the balance as per Cash Book
[Ans: Balance as per Cash Book 722,275]
Solution:
Bank Reconciliation statement of Trader
Question 6.
Vinay Ltd.,’s bank balance as per Pass Book is ₹ 8,900. There is a disagreement between cash book and pass book balances as on 31-03-2024. Prepare Bank Reconciliation Statement by considering the following transactions.
a) Cheques issued but not yet presented for payment ₹ 2,100.
b) Cheques deposited for collection, but not yet realized ₹ 900.
c) A wrong debit given by bank in Pass Book ₹ 500.
d) Direct payment of insurance premium as per standing instructions 7600.
[Ans: Balance as per Cash Book ₹ 8,800]
Solution:
Bank Reconciliation statement of Paparao and Sons as on 30th September 2023
Question 7.
On 31st December, 2023 the Cash Book showed an unfavourable balance of ₹ 29,000. Prepare a Bank Reconciliation Statement with the following information.
a) Cheques had been deposited into the bank but were not collected ₹ 4,530.
b) A cheque issued to Gowtham Reddy, the supplier, has not been encashed ₹ 5,040.
c) There was a debit entry in the Pass Book of ₹ 600 for bank charges.
d) Bills worth ₹ 2,000 were discounted but dishonoured.
[Ans: Overdraft balance as per Pass Book 731,090]
Solution:
Bank Reconciliation statement of Vinay Ltd as on 31-03-2024
Question 8.
From the following particulars prepare a Bank Reconciliation Statement.
a) Bank Overdraft as per cash book ₹ 16,100.
b) Debit side of the bank column of Cash Book cast short by ₹ 200.
c) Bills collected directly by bank ₹ 3,500.
d) Bank charges recorded twice in the Cash Book ₹ 240.
e) The cheques of Rs.6,000 deposited but collections as per statement ₹ 2,600.
[Ans: Overdraft balance as per Pass Book ₹ 15,560]
Solution:
Bank Reconciliation statement as on 31st December 2023
Question 9.
Prepare Bank Reconciliation Statement of Poornima as on 31-03-2024.
a) Bank Overdraft as per Pass Book ₹ 6,500.
b) Cheques deposited into bank 5,000, but only ₹ 2,000 was collected.
c) A customer directly deposited in our bank ₹ 1,200.
d) Dividend ₹ 300 collected by the bank has credited in the Pass Book only.
e) Cheques issued but not presented for payment ₹ 1,500.
[Ans: Overdraft balance as per Cash Book ₹ 6,500]
Solution:
Bank Reconciliation statement
Question 10.
From the following particulars prepare Bank Reconciliation Statement as on 31st March, 2024.
a) Overdraft balance as per pass book ₹ 22,470.
b) As per standing instructions given to bank, chamber of commerce fee ₹ 2,530 was paid by the bank but was not recorded in the Cash Book.
c) On 23-03-2024, the credit side of the bank column of the Cash Book was under cast ₹ 1,900.
d) Dividend on shares ₹ 3,200 was collected by bank directly the trader has no information.
e) Two cheques of ₹ 1,850 and Rs.1,500 were issued but out of them only one cheque of ₹ 1,850 was presented for payment up to reconcile day.
[Ans: Overdraft balance as per Cash Book ₹ 22,740]
Solution:
Bank Reconciliation statement of Poornima as on 31-03-2024
