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NIOS Class 12 Accountancy Chapter 10 Bank Reconciliation Statement
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Bank Reconciliation Statement
Chapter: 10
| Module – 2: Trial Balance and Computers |
INTEXT QUESTIONS 10.1
Fill in the blanks with suitable word/words:
(i) The copy of customer’s account with the Bank is called ___________.
Ans: Pass Book.
(ii) The cheques deposited are entered on the ___________ of the bank column of cash book.
Ans: Debit Side.
(iii) Bank Reconciliation statement is prepared to ___________ the bank balance as shown by the cash book and the bank statement.
Ans: Reconcile.
(iv) Cheques issued are posted on the ___________ side of the bank column of Cash Book.
Ans: Credit.
(v) The credit column of pass book should be equal to ___________ column of cash book and debit column of pass book should equal to ___________ column of cash book, if there are no differences.
Ans: Debit, Credit.
INTEXT QUESTIONS 10.2
Write ‘T’ for True and ‘F’ for False statements:
(i) Bank credits firm’s account as soon as it receives cheques from the firm.
Ans: F.
(ii) Bank charges are never entered in the Cash Book.
Ans: F.
(iii) Banks make certain payments on behalf of the customer under his standing instructions.
Ans: T.
(iv) In case of cheques issued but not encashed, the balance of pass book will be less than the balance of Cash Book.
Ans: F.
(v) Direct deposits in the bank by a customer would increase the balance shown by the Pass Book.
Ans: T.
INTEXT QUESTIONS 10.3
You are given the balance as per Pass Book as the starting point and balance as per Cash Book has to be ascertained by you.
Out of the following transactions, write ‘A’ against those amounts which will be added to the balance of Pass Book and ‘R’ against those by which balance of Pass Book will be reduced:
(i) Interest allowed by Bank.
Ans: R.
(ii) Cheques deposited with bank and dishonoured.
Ans: A.
(iii) Cheques issued but not encashed.
Ans: R.
(iv) Bank charges.
Ans: A.
(v) Insurance premium paid by bank.
Ans: A.
(vi) Dividends on share collected by bank.
Ans: R.
INTEXT QUESTIONS 10.4
Fill in the blanks choosing correct word from the words given in brackets:
(i) Overdraft means ___________ balance. [Favourable / Unfavourable]
Ans: Unfavourable.
(ii) The balance of cash book is ___________ in case of overdraft. [Debit / Credit]
Ans: Credit.
(iii) Bank charges will ___________ in case of overdraft as per Cash Book. [Increase / Decrease]
Ans: Increase.
(iv) Cheques issued but not encashed will ___________ in case of the overdraft as per Pass Book.[Increase / Decrease]
Ans: Decrease.
(v) Interest allowed by bank ___________ in case of the favourable balance of cash book.
Ans: Adds To.
| TERMINAL EXERCISE |
1. What is meant by a Bank Reconciliation Statement?
Ans: Bank Reconciliation Statement is a statement prepared to reconcile the difference between the balances as per the bank column of the cash book and pass book on any given date.
Bank Reconciliation Statement (BRS) is a formal statement prepared by a business to explain and reconcile the causes of the difference between the bank balance shown in the firm’s Cash Book and the balance shown in the bank’s Pass Book (or bank statement).
Since these two records track the same transactions from different perspectives, they should ideally match. However, due to timing differences or errors, they often diverge.
2. What is the need of preparing Bank Reconciliation Statement?
Ans: It is neither compulsory to prepare Bank Reconciliation Statement nor a date is fixed on which it is to be prepared. It is prepared from time to time to check that all transactions relating to bank are properly recorded by the businessman in the bank column of the cash book and by the bank in its ledger account. Thus, it is prepared to reconcile the bank balances shown by the cash book and by the bank statement. It helps in detecting, if there is any error in recording the transactions and ascertaining the correct bank balance on a particular date.
3. Enumerate the causes of difference in the balance of cash book and pass book.
Ans: The causes of difference in the balance of cash book and pass book are as follows:
(i) Cheques issued but not yet presented for payment: Cheques issued are recorded in cash book immediately but are recorded in pass book only when presented.
(ii) Cheques deposited but not yet collected: Cheques deposited are recorded in cash book but are credited in pass book only after collection.
(iii) Amount directly deposited in the bank account: Amount deposited directly by customers is recorded in pass book but not in cash book until information is received.
(iv) Bank charges: Charges deducted by the bank are recorded in pass book but not immediately in cash book.
(v) Interest and dividend received by the bank: These are directly credited by the bank in pass book but recorded later in cash book.
(vi) Direct payments made by the bank: Payments like insurance, rent, etc. made by bank are recorded in pass book but later in cash book.
(vii) Dishonour of cheques/bills: Dishonoured cheques are recorded in pass book immediately but later in cash book.
(viii) Errors committed by the firm: Mistakes in recording or posting in cash book.
(ix) Errors committed by the bank: Mistakes made by the bank while recording transactions.
4. From the following particulars, prepare Bank Reconciliation Statement as on December 31, 2014:
(i) Balance as per Cash Book ₹4,200
(ii) Cheques issued but not presented for payment ₹2,000
(iii) Cheques deposited but not collected ₹3,000
(iv) Bank charges debited by the bank ₹250
Ans: Given: Cash Book Balance = ₹4,200
Bank Reconciliation Statement
| Particulars | Plus (₹) | Minus (₹) |
| Balance as per Cash Book | 4,200 | — |
| Cheques issued but not presented | 2,000 | — |
| Cheques deposited but not collected | — | 3,000 |
| Bank charges | — | 250 |
| Balance as per Pass Book | 2,950 |
5. Prepare Bank Reconciliation Statement as on March 31, 2014. On this date the passbook of M/s Noopur Industries showed a balance of ₹27,500.
(a) Cheques of ₹14,000 directly deposited by a customer.
(b) Cheques for ₹13,500 were issued during the month of March but of these cheques for ₹1,500 were not presented by the end of March.
(c) The bank collected ₹2,500 as dividend on shares.
(d) Cheques of ₹17,500 were paid into bank but of ₹8,500 were realised in the month of April.
Ans: Given: Pass Book Balance = ₹27,500
Bank Reconciliation Statement
| Particulars | Plus (₹) | Minus (₹) |
| Balance as per Pass Book | 27,500 | — |
| Cheques deposited but not collected | 8,500 | — |
| Cheques issued but not presented | 1,500 | — |
| Direct deposit by customer | — | 14,000 |
| Dividend collected by bank | — | 2,500 |
| Balance as per Cash Book | 21,000 |
6. On April 1, 2014, Rohan had an overdraft of ₹16,000 as shown by the cash book. Cheques amounting to ₹6,000 had been paid by him but not collected by the bank till date. He issued cheques of ₹8,000 which were not presented to the bank for payment. There was a debit in his passbook of ₹500 for interest and ₹200 for bank charges and a cheque of ₹5,000 was paid into bank but the same was debited twice in the cash book. Prepare Bank Reconciliation Statement.
Ans: Given: Overdraft as per Cash Book = ₹16,000
Bank Reconciliation Statement
| Particulars | Plus (₹) | Minus (₹) |
| Overdraft as per Cash Book | — | 16,000 |
| Cheques issued but not presented | 8,000 | — |
| Cheques deposited but not collected | — | 6,000 |
| Interest and bank charges | — | 700 |
| Error (double entry of cheque) | 5,000 | — |
| Overdraft as per Pass Book | 9,700 |
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