Class 11 Accountancy Important Chapter 5 Bank Reconciliation Statement

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Class 11 Accountancy Important Chapter 5 Bank Reconciliation Statement

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Bank Reconciliation Statement

Chapter: 5

IMPORTANT QUESTION AND ANSWER

Short Question and Answer:

1. What causes a discrepancy between the cash book and the bank passbook?

Ans: Differences arise due to timing issues, errors in recording transactions, unprocessed deposits or cheques, bank charges, or interest credits not recorded in the cash book.

2. What is the purpose of preparing a Bank Reconciliation Statement?

Ans: The purpose is to reconcile the balance shown in the cash book with that shown in the bank passbook, identifying discrepancies, errors, or unrecorded transactions.

3. How does the issue of a cheque not presented for payment affect the bank reconciliation?

Ans: The cheque will be deducted from the balance as per the cash book in the bank reconciliation statement to match it with the passbook balance.

4. What impact does an interest credit from the bank have on the cash book during reconciliation?

Ans: Interest credited by the bank should be added to the balance in the cash book since it may not have been recorded at the time the passbook was balanced.

5. Why are bank charges subtracted during the preparation of the Bank Reconciliation Statement?

Ans: Bank charges are subtracted from the cash book because they are often recorded in the passbook but not initially reflected in the business’s cash book.

6. When preparing a Bank Reconciliation Statement, what do you do when there are direct deposits made by customers?

Ans: Direct deposits should be added to the cash book balance to match the balance in the bank passbook.

7. What effect does a dishonoured cheque have on the reconciliation process?

Ans: A dishonoured cheque is deducted from the bank passbook balance, and the entry is adjusted in the cash book as well.

8. How should a cheque recorded twice in the cash book be treated in the bank reconciliation statement?

Ans: The duplicate cheque amount should be subtracted from the cash book balance to correct the error.

9. What is the effect of a cheque deposited but not collected on the reconciliation process?

Ans: The deposited cheque amount is subtracted from the cash book, as it hasn’t been processed by the bank.

10. What should be done if the bank directly collects a payment from a customer but the business doesn’t know about it?

Ans: The payment should be added to the cash book balance once the business is made aware of the transaction.

11. Explain how to prepare a Bank Reconciliation Statement when the balance as per the passbook is overdrawn (negative).

Ans: When the passbook shows an overdraft, adjustments include adding unpresented cheques and direct deposits to the cash book and subtracting the bank charges and dishonoured cheques to reconcile the cash book balance.

12. How would you treat an error in the cash book regarding a cheque recorded for a wrong amount in the bank reconciliation?

Ans: The incorrect amount should be corrected in the cash book and subtracted from the passbook if the bank has recorded it correctly.