Bank Reconciliation Statement — Practice

Question 1

What is a Bank Reconciliation Statement?

Accepted Answer

A statement that reconciles the bank balance shown by the cash book with that shown by the passbook, explaining the causes of difference.

✦ Answer: a statement reconciling cash book and passbook balances.

Question 2

Give one timing reason for a difference between cash book and passbook.

Accepted Answer

Cheques issued but not yet presented for payment (or cheques deposited but not yet cleared).

✦ Answer: cheques issued but not presented.

Question 3

From a favourable cash book balance, are bank charges added or subtracted?

Accepted Answer

Subtracted (the bank has reduced the balance; the cash book hasn't yet).

✦ Answer: subtracted.

Question 4

Starting from a favourable cash book balance, state the treatment of (a) cheque issued not presented, (b) cheque deposited not credited.

Accepted Answer

Step 1 — (a) Cheque issued not presented: ADD.

Step 2 — (b) Cheque deposited not credited: LESS.

✦ Answer: add (a); subtract (b).

Question 5

Cash book balance ₹20,000 (Dr). Cheques issued not presented ₹5,000; cheques deposited not credited ₹3,000. Find the passbook balance.

Accepted Answer

Step 1 — Start 20,000; add cheques not presented 5,000 → 25,000.

Step 2 — Less cheques not credited 3,000 → 22,000.

✦ Answer: passbook balance ₹22,000 (Cr).

Question 6

Where do bank charges and interest collected by the bank appear, and how do they affect a favourable cash book balance?

Accepted Answer

Step 1 — Bank charges: debited by bank, not yet in cash book → subtract.

Step 2 — Interest/dividend collected by bank → add.

✦ Answer: charges subtracted; interest collected added.

Question 7

Cash book bank balance ₹50,000 (Dr). Cheques issued not presented ₹8,000; cheques deposited not credited ₹6,000; bank charges ₹500; interest credited by bank ₹1,500. Prepare the BRS.

Accepted Answer

Step 1 — Balance as per cash book 50,000.

Step 2 — Add: cheques not presented 8,000; interest credited 1,500 → +9,500.

Step 3 — Less: cheques not credited 6,000; bank charges 500 → −6,500.

Step 4 — Balance as per passbook = 50,000 + 9,500 − 6,500 = ₹53,000.

✦ Answer: passbook balance ₹53,000 (Cr).

Question 8

How does the treatment change if the cash book shows an overdraft?

Accepted Answer

Step 1 — An overdraft is a credit balance in the cash book (the firm owes the bank).

Step 2 — The add/less treatment of each item is reversed compared with a favourable balance.

Step 3 — Careful sign handling gives the passbook (debit) balance.

✦ Answer: reverse the add/less treatment for an overdraft.

Question 9

State two reasons why a BRS is prepared.

Accepted Answer

Step 1 — To detect errors and delays and confirm the accuracy of both records.

Step 2 — To discover items not yet recorded (charges, interest) and update the cash book.

✦ Answer: detect errors/omissions and update the cash book.

Practice — Bank Reconciliation Statement

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