NCERT Most important question:
Q1. Prepare the proforma of bank reconciliation statement.
Ans: The proforma of bank reconciliation statement:
| Particular | Amount | |
| Add: Less: | Balance as per cash bookCheques issued but not presentedInterest credited by the bank Cheques deposited but not credited by the bankBank charges no recorded in the cash bookBalance as per passbook |
Q2. Bank Reconciliation Statement is prepared by:
A. Bank
B. Creditor
C. Debtor
D. Account holder in bank
Ans: D. Account holder in bank prepares Bank Reconciliation Statement.
Q3. What do you understand by bank overdraft?
Ans: The term “bank overdraft” refers to withdrawing funds from bank accounts in excess of their limits, resulting in the available amount falling below zero. Interest will be applicable only for the amount actually used from the overdraft account.
Q4. State true and false:
Qa. The amount in bank statement should tally with the balance shown in the cash book.
Ans: The above statement is True. It must tally with each other for a period end.
b. Deposit exceeds the withdrawals it shows a debit balance.
Ans: The above statement is False. When deposits exceed withdrawals, a credit balance is displayed.
Q5. Why do we need reconciliation?
Ans: When two different statements are made, and the bank statement and the cash book kept by the users are compared, they frequently do not match. We also need to keep track of or create reconciliation statements for the same reason.
Q6. Explain what difference is caused by errors.
Ans: The following are two primary differences that are produced by bank reconciliation statement errors:
a. Errors made by the business when registering the transaction.
b. Errors committed by the bank during the transaction’s recording.
Q7. How to prepare Bank Reconciliation Statement?
Ans: There are two ways to make a bank reconciliation statement:
a. It is possible to prepare a Bank Reconciliation Statement without modifying the balance in the cash book.
b. After the cash book has been adjusted, a bank reconciliation statement is prepared.
Q8. How to deal with overdraft?
Ans: When an excess amount is removed from a bank account that exceeds its limit, it is referred to as a bank overdraft. Because businesses occasionally require more funds, they obtain an overdraft from the bank. The bank overdraft is treated as a negative amount on the bank reconciliation statement in this case.
Q9. What do you understand by correct cash balances?
Ans: Receipts and payments in the books may have errors that must be corrected. To repair these inaccuracies that occur during the recording of revenues and payments, a proper cash balance is computed before the statement is reconciled.
Q10. How we can deal with favourable balance?
Ans: The steps below will assist you in dealing with a favourable balance:
i. The first item on the statement is the balance in the cash book, which can also be the balance in the passbook.
ii. The top of the statement has Date written on it.
iii. Amounts directly deposited in a bank account and cheques issued but not present for payment are added.
iv. All bank credits, such as dividends and interest, as well as direct bank deposits, are included.
v. Adjustments for errors are made using the rectification of errors principle.
vi. At this point, the net amount reported in the statement should match the balance in the passbook.
Q11. When the timing difference is created?
Ans: When a cash book and a bank passbook are compared, a temporal gap occurs, which is referred to as a timing difference.
The temporal gap is caused by the following factors:
a. Cheques that have been paid into the bank but not yet collected cause a time lapse.
b. A cheque has been issued by the bank, but it has yet to be presented in order to receive payment
c. Amounts deposited straight into a bank account without using a debit card. Being noted in the company’s cash book
d. A direct debit (deduction) is made on your behalf by the bank and the customer, which the vast majority of customers are completely unaware of. As a result, a time gap has developed.
Q12. Prepare a bank reconciliation statement as on July 31, 2018 from the following details of Rachna & Co.
a. Balance as per the cash book Rs. 55,000.
b. Cheques for Rs 5,300 is deposited in the bank but not yet collected by the bank.
c. R.s 200 bank incidental charges debited to Rachna & Co. account, which is not recorded in cash book.
d. A cheque for Rs 20,000 is issued by Rachna & Co. not presented for payment.
Ans: In the books of Rachna & Co.
Bank reconciliation statement
as on July 31, 2018
| S.No. | Particular | Dr. Amt (+) | Cr. Amt (-) |
| Balance as per Cash book Cheque issued but not presented for payment Cheques deposit but not credited by the bank Bank incidental charges debited by the bank Balance as per passbook (b/f) | 55,000 20,000 | 5,300 200 69,500 | |
| 75,000 | 75,000 |
Q13. On March 31, 2018 the bank column of the cash book of Namrata & Co. showed a credit balance of Rs. 1,17,100 (Overdraft). From the following cash and bank statement particulars: Prepare bank reconciliation statement as on March 31, 2018.
a. Payment received from a customer directly by the bank Rs. 28,500 but no entry was made in the cash book.
b. Cheques received and recorded in the cash book but not sent to the bank of collection Rs. 13,400.
c. Cheques issued for Rs. 1,80,400 not presented for payment. Interest of Rs. 8,800 charged by the bank was not entered in the cash book. Prepare bank reconciliation statement
Ans: In the Books of Namrata & Co
Bank reconciliation statement
as on March 31, 2018
| S.No. | Particular | Dr. Amt (+) | Cr. Amt (-) |
| Overdraft as per cash book Cheques received and recorded in cash book but not sent to the bankfor collection Interest on bank overdraft debited by the bank but not entered inthe cash book Payment received from the customer directly Credit in the bank A/c but not entered in the cash book cheque issued but not presented for payment Balance as per the passbook (b/f) | 28,500 1,80,400 | 1,17,100 13,400 8,200 7,000 63,200 | |
| 2,08,900 | 2,08,900 |
Q14. Prepare bank reconciliation statement for Swarnim for March 31, 2018, from the following particulars Swarnim had on overdraft of Rs. 7,000 as shown by her cash book. Cheques amounting to Rs 1,500 had been paid in by her but were not collected by the bank. She issued cheques of Rs 750 which were not presented to the bank for payment. There was a debit in her passbook of Rs. 50 for interest and Rs. 150 for bank charges.
Ans: In the Books Swarnim
Bank reconciliation statement
as on March 31, 2018
| S.No. | Particular | Dr. Amt (+) | Cr. Amt (-) |
| Overdraft as per cash book Cheques received but not yet collected charged by the bank Bank Charge Cheque issued but not presented for payment Balance as per the passbook | 750 7,950 | 7,000 1,500 50 150 | |
| 8,700 | 8,700 |
Q15. What is a bank reconciliation statement?
Ans:
Just like the bank organisations maintain a cash book in order to record the bank and cash transactions, similar to this the bank also maintains an account for each customer in its book where all the deposits made by the customer are recorded. The deposits are recorded on the credit side of the account and the withdrawals are recorded on the debit side of the account. A copy of this is sent to the customer address is called the passbook. The bank balance presented by the cash book and the passbook does not always match. Thus, the entries in them are compared and the differences that arise are rectified, and to reconcile the balances in the cash books and the passbook a statement is prepared, which is known as the reconciliation statement.
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