Bank Reconciliation Statement | Aster Classes

Chapter 6: Bank Reconciliation Statement

Answer in one sentence:

1.Who prepares a bank Pass Book?

SOLUTION

Bank Pass Book is prepared by Bank, which is nothing but a copy or extract of ledger account of account holder appearing in the bank ledger.

2.What is pay-in-slip?

SOLUTION

When the account holder deposits cheque or cash into his bank account, a slip is filled by him, which is known as Pay-In-Slip also called Deposit Slip.

3.What is bank overdraft?

SOLUTION

The amount withdrawn by the current account holder in excess of the balance in his current account up to a predetermined limit decided by the bank on the basis of pre decided conditions, is known as Bank Overdraft

4.What is withdrawal slip?

SOLUTION

A form/slip which is to be filled for withdrawing money from the bank is known as Withdrawal Slip.

5.Who sends the bank statement?

SOLUTION

Bank statement is issued by the bank to the current account holders.

6.What does a debit balance in Cash Book represent?

SOLUTION

The debit balance of the cash book represents bank balance as per cash book.

7.Who prepares the Bank Reconciliation Statement?

SOLUTION

Bank Reconciliation Statement is prepared by the proprietor or account holder.

8.What does debit balance in Pass Book represent?

SOLUTION

Debit balance in pass book indicates bank overdraft as per pass book.

9.On which side is interest on bank deposit recorded in Pass Book?

SOLUTION

Interest on bank deposit is recorded on the credit side of pass book.

10.Why is the Bank Reconciliation Statement prepared?

SOLUTION

Bank Reconciliation Statement is prepared to explain the causes of disagreement between the balances shown by the cash book under the bank column and the balance shown in the pass book.

Give one word/term/phrase which can substitute the following statement:

1.The account on which overdraft facility is allowed by bank.

SOLUTION

The account on which overdraft facility is allowed by bank. – Current account

2.Extract of ledger account of account holder in the books of bank.

SOLUTION

Extract of ledger account of account holder in the books of bank. – Pass Book

3.Alphanumeric code that facilitates electronic funds transfer in India.

SOLUTION

Alphanumeric code that facilitates electronic funds transfer in India. – Indian Financial System [IFSC]

4.Statement showing the causes of disagreement between balance of Cash Book and Pass Book.

SOLUTION

Statement showing the causes of disagreement between balance of Cash Book and Pass Book. – Bank Reconciliation Statement [BRS]

5.Debit balance in Pass Book.

SOLUTION

Debit balance in Pass Book. – Overdraft as per pass book

6.A form which is filled for depositing cash or cheque into bank.

SOLUTION

A form which is filled for depositing cash or cheque into bank. – Pay-In-Slip

7.Left hand side of Pay-in-slip.

SOLUTION

Left hand side of Pay-in-slip. – Counterfoil

8.Credit balance in Cash Book.

SOLUTION

Credit balance in Cash Book. – Overdraft as per cash book

9.A book maintained by trader to record banking transactions.

SOLUTION

A book maintained by trader to record banking transactions. – Cash book

10.Excess of bank deposits over withdrawals by businessman in bank current account.

SOLUTION

Excess of bank deposits over withdrawals by businessman in bank current account. – Bank balance

Do you agree or disagree with the following statement:

1.The bank column of Cash Book represents bank account.

  • Agree
  • Disagree

2.Bank statement enables account holder to prepare Bank Reconciliation Statement.

  • Agree
  • Disagree

3.Cheques issued for payment but not presented to bank appears in Cash Book only.

  • Agree
  • Disagree

4.Bank Reconciliation Statement is prepared only during the year end.

  • Agree
  • Disagree

5.Bank Reconciliation Statement is similar to bank statement.

  • Agree
  • Disagree

6.Bank balance as per Cash Book is always equal to bank balance as per Pass Book.

  • Agree
  • Disagree

7.Bank advice is sent by the businessman to bank.

  • Agree
  • Disagree

8.Pay-in-slip is used for depositing cheque into bank.

  • Agree
  • Disagree

9.Difference in Cash Book balance and Pass Book balance may arise due to errors committed while recording.

  • Agree
  • Disagree

10.Payment and receipt of cash through internet banking generates automatic proof.

  • Agree
  • Disagree

Select the most appropriate alternative from those given and rewrite the following statement:

1.Overdraft means _______ balance of Cash Book.

  • closing
  • debit
  • opening
  • credit

2.When a cheque is deposited and collected by bank Pass Book is _________.

  • dishonoured
  • debited
  • credited
  • written

3.A __________ is a summary of financial transactions that take place over a period of time on a bank account.

  • withdrawal slip
  • bank advice
  • bank statement
  • Pay-in-slip

4.Debiting an entry in Cash Book ___________ cash balance.

  • increases
  • decreases
  • nullifies
  • none of the above

5.Bank Reconciliation Statement is prepared by _________.

  • student
  • businessman
  • bank
  • none of the above

6.Bank balance as per Pass Book means ___________ balance of Pass Book.

  • credit
  • opening
  • debit
  • closing

7.Bank gives overdraft facility to __________ account holder.

  • savings
  • recurring
  • current
  • fixed

8.Debit balance as per Cash Book is also known as ___________ balance.

  • favourable
  • overdraft
  • abnormal
  • unfavourable

9.When extracts of Cash Book and Pass Book are given for uncommon periods, only ________ items are considered for preparation of Bank Reconciliation Statement.

  • uncommon
  • normal
  • favourable
  • common

10.When extract of Cash Book and Pass Book are given for common period, only _________ items are considered for preparation of Bank Reconciliation Statement.

  • uncommon
  • common
  • favourable
  • unfavourable

Complete the following statement:

1.Payments credited in Cash Book are __________ in Pass Book.

SOLUTION

Payments credited in Cash Book are debited in Pass Book.

2.While preparing Bank Reconciliation Statement only __________ column of Cash Book is considered.

SOLUTION

While preparing Bank Reconciliation Statement only bank column of Cash Book is considered.

3.Cheques issued to creditors appear first in ____________ book.

SOLUTION

Cheques issued to creditors appear first in cash Book.

4.A statement showing the reasons for difference in Cash Book balance and Pass Book balance is known as ___________.

SOLUTION

A statement showing the reasons for difference in Cash Book balance and Pass Book balance is known as Bank Reconciliation Statement.

5.Overcast on receipt side of Pass Book means _________ in Pass Book balance.

SOLUTION

Overcast on receipt side of Pass Book means increase in Pass Book balance.

6.Online transfer made to our creditors appear on the _________ side of Cash Book.

SOLUTION

Online transfer made to our creditors appear on the payment credit side of Cash Book.

7.Interest on overdraft charged by bank is ____________ in Pass Book.

SOLUTION

Interest on overdraft charged by bank is debited in Pass Book.

8.Normally the Cash Book shows debit balance and Pass Book shows ________ balance.

SOLUTION

Normally the Cash Book shows debit balance and Pass Book shows credit balance.

9.The form filled for withdrawing cash from bank is known as __________.

SOLUTION

The form tilled for withdrawing cash from bank is known as withdrawal slip.

10.A businessman

can update his records on receiving __________.

SOLUTION

A businessman can update his records on receiving bank advice.

State whether the following statement is True or False with reasons:

1.Cheques deposited into bank but not yet cleared appears in the Pass Book only.

Options

  • True
  • False

SOLUTION

This statement is False.

Cheques deposited into bank should be recorded first on the debit side of cash book and after receiving the amount by bank, bank will credit it. Thus, uncleared cheques appear in the cash book only.

2.Direct deposit made by debtors into businessman’s bank account is recorded on the credit side of Pass Book.

Options
  • True
  • False

SOLUTION

This statement is True.

As businessman is unaware of any amount directly deposited by debtors into a businessman‘s bank account. He is not in a position to record it in cash book while it is already recorded on the credit side of pass book

3.Businessman can prepare Bank Reconciliation statement only with Cash Book Balance.

Options
  • True
  • False

SOLUTION

This statement is False.

Bank Reconciliation Statement can be prepared with cash book balance or pass book balance or with overdraft by a businessman at the end of a specified period.

4.When overdraft as per Cash Book is given, bank charges debited in Pass Book only, is to be added.

Options
  • True
  • False

SOLUTION

This statement is True.

When overdraft as per cash book is given. It means that it is a debt for a businessman to bank and bank charges increase the debt towards bank. Therefore it is to be added in the overdraft amount.

5.Bank Statement is sent by Bank to businessman.

Options
  • True
  • False

SOLUTION

This statement is True.

As a matter of service, the bank provides bank statement to account holder because the bank statement is a summary of financial transactions which have taken place over a given period of time between the bank and his customer.

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