1. ‘NSF’ marked in the cheque sent back by the bank indicates _______.

(a) Cheque has been forged

(b) A bank couldn’t verify the identity

(c) No sufficient money

(d) A cheque cannot be cashed because it’s illegal

Answer: (c) No sufficient money

2. Bank reconciliation statement compares a bank statement with _________.

(a) Cash payment journal

(b) Cash receipt journal

(c) Financial statements

(d) Cash book

Answer: (d) Cash book

3. What is the main purpose of preparing a bank reconciliation statement?

(a) To know the bank balance

(b) To know the balance of bank statement

(c) To correct the cash book

(d) To identify causes of difference between cash book and bank statement

Answer: (d) To identify causes of difference between cash book and bank statement

4. A bank reconciliation statement is ______.

(a) A part of cash book

(b) A part of pass book

(c) A statement prepared by the bank

(d) A statement prepared by a customer

Answer: (d) A statement prepared by a customer

5. A bank reconciliation statement is prepared with the balance of ______.

(a) Cash book

(b) Pass book

(c) Either cash book or pass book

(d) Neither cash book nor pass book

Answer: (c) Either cash book or pass book

6. Unfavourable bank balances mean ______.

(a) Credit balance in the cash book

(b) Debit balance in the pass book

(c) Debit balance in the cash book

(d) Favourable balance in the cash book

Answer: (b) Debit balance in the pass book

7. The cheque which is issued to the creditor but is not presented for payment is called _____.

(a) Uncredited cheque

(b) Outstanding cheque

(c) Omitted cheque

(d) Dishonored cheque

Answer: (b) Outstanding cheque

8. When a cheque is returned by the bank showing some technical reason is known as _______.

(a) Honor of the cheque

(b) Balance of account

(c) Dishonor of the cheque

(d) None of the above

Answer: (c) Dishonor of the cheque

9. Which of the following items is not a reason for the difference between bank balance as per cash
book and pass book?

(a) Dishonored cheques

(b) Cheques deposited but not yet cleared

(c) Credit sales

(d) Cheques issued but not yet presented for payment

Answer: (c) Credit sales

10. XYZ Ltd. receives a cheque for Rs. 100, records it in the cash book, and deposits it on the same
day. A statement sent by the bank that day does not show this Rs. 100. How is this shown on the bank
reconciliation statement?

(a) As an uncredited deposit added to the bank statement balance

(b) As an uncredited deposit deducted from the bank statement balance

(c) As an unpresented cheque added to the bank statement balance

(d) As an unpresented cheque deducted from the bank statement balance

Answer: (a) As an uncredited deposit added to the bank statement balance

11. The main purpose of preparing a bank reconciliation statement is _____.

(a) To know the bank balance

(b) To know the balance of bank statement

(c) To correct the cash book

(d) To identify causes of difference between cash book and bank statement

Answer: (d) To identify causes of difference between cash book and bank statement

12. The balance on the debit side of the bank column of the cash book indicates ______.

(a) The total amount has drawn from the bank

(b) Cash at bank

(c) The total amount overdraft in the bank

(d) None of the above

Answer: (b) Cash at bank

13. A bank reconciliation statement is prepared by _____.

(a) Banker

(b) Accountant of the business

(c) Auditors

(d) Registrar
Answer: (b) Accountant of the business

14. Bank reconciliation statement is ______.

(a) Part of bank statement

(b) Part of the cash book

(c) A separate statement

(d) A subdivision of journal

Answer: (c) A separate statement

15. Favorable balance means _______.

(a) Credit balance in the cash book

(b) Credit balance in the bank statement

(c) Debit balance in the cash book

(d) both b and c

Answer: (d) both b and c

Illustration: 1
From the following particulars prepare Bank reconciliation statement of Arun
Ltd. as on 31st March, 2021:
(a) Balance as per Pass Book was Rs. 14,000.
(b) Bank collected a cheque of Rs. 500 on behalf of Arun Ltd. but forgot to
record it in the Pass Book.
(c) Bank deposits a cash deposit of Rs. 2,589 as Rs. 2,598.
(d) The payment of a cheque of Rs. 700 was recorded twice in the Pass Book.
(e) Dividend collected by bank Rs. 450.
(f) Bank charges Rs. 250 debited by the bank.
(Ans : 14,991/- Bal. as per C/B)

Question 1:

Rim Zim Ltd. maintains a current account with the State Bank of India. On 31st March, 2017, the bank
column of its cash book showed a debit balance of ₹ 1,54,300. However, the bank statement showed
a different balance as on that date. The following were the reasons for the difference :

₹
(i) Cheques deposited, but not yet credited by the bank 75,450
(ii) Cheques issued, but not yet presented for payment 80,760
(iii) Bank charges not yet recorded in the cash book 1,135
Cheques received by the bank directly from trade
(iv) 1,35,200
debtors
Insurance premium paid by the bank as per standing
(v) 15,400
instructions, but not yet recorded in the cash book
Dividend collected by the bank, but not yet recorded
(vi) 1,000
in the cash book
Find out the balance as per the bank statement as on 31st March, 2017.

Answer:

Bank Reconciliation Statement

as on March 31, 2017
S. Plus Minus
No Particulars Items Items
. (Rs) (Rs)
Debit Balance as per Cash Book 1,54,30
0
Add: (ii) Cheques issued but not presented 80,760
(iv) Cheques received by bank directly from Trade Debtors 1,35,20
0
(vi) Dividend collected not recorded in Cash Book 1,000

Less: (i) Cheques deposited but not credited by the bank 75,450
(iii) Bank charges not recorded in the Cash Book 1,135
(v) Insurance premium paid as per standing instructions 15,400
Credit Balance as per Pass Book 2,79,27
5
3,71,26 3,71,26
0 0

Page No 15.28:

Question 2:
The balance of cash at bank as shown by the Cash Book of Pan & Co. on 31st December, 2016, was
₹ 7,500. On checking the entries in the Cash Book with the Pass Book, it was ascertained that
cheques of ₹ 500 and ₹ 700 respectively paid in on 30th December, were not credited until the 2nd
January following and three cheques of ₹ 600, ₹ 800 and ₹ 1,200 issued on the 28th December
were not presented until the 3rd of January. There was a credit of ₹ 125 in the Pass Book in respect of
interest under date 31st December, which was not entered in the Cash Book. There were also Bank
Charges debited in the Pass Book amounting in all to ₹ 10 which were not entered in the Cash Book.
Prepare a Bank Reconciliation Statement as at 31st December, 2016.

Answer:

Bank Reconciliation Statement

as on December 31, 2016
Plus
S. Minus Items
Particulars Items
No. (Rs)
(Rs)
Debit Balance as per Cash Book 7,500
Add: Cheques issued but not presented for payment 2,600
(600 + 800 + 1,200)
Interest credited by bank 125

Less: Cheques deposited but not credited by the bank 1,200

(500 + 700)
Bank Charges 10
Credit Balance as per Pass Book 9,015
10,225 10,225

Page No 15.28:

Question 3:

On 30th June, 2014, the bank column of Mohan Kapoor's Cash Book showed a debit balance of ₹
12,000. On checking the Cash Book with bank statement you find that:-
1. Cheques paid into Bank ₹ 8,000, but out of these only cheques of ₹ 6,500 were cleared and
credited by the Bankers upto 30th June.
2. Cheques of ₹ 9,200 were issued but out of these only cheques of ₹ 7,000 were presented for
payment upto 30th June.
3. The receipt column of the Cash Book has been undercast by ₹ 200.
4. The Pass Book shows a credit of ₹ 330 as interest on investments collected by bankers and debit of
₹ 60 for bank charges.
5. On 29th June a Customer deposited ₹ 3,000 direct in the bank account but it was entered only in
the Pass Book.
Prepare a Bank Reconciliation Statement.

Answer:

Bank Reconciliation Statement

as on June 30, 2014
S Particulars Pl M
. u in
s u
N It s
 It
e
e
m
m
o s
s
. (
(
R
R
s)
s)
Debit Balance as per Cash Book 1
2,
0
0
0
Add: 2. Cheques issued but not 2,
presented (9,200 – 7,000) 2
0
0
3. Receipt column of Cash Book was 2
undercasted 0
0
4. Interest on investment collected by 3
Bank 3
0
5. Amount directly deposited by 3,
Customer 0
0
0

Less: 1. Cheques deposited but not 1,

credited (8,000 – 6,500) 5
0
0
4. Bank Charges 6
0
Credit Balance as per Pass Book 1
6,
1
7
0
1 1
7, 7,
7 7
3 3
0 0

Page No 15.28:

Question 4:

On 30th June 2014, the bank balance as per Sanjay Yadav's Cash Book was ₹ 1,500. On comparing
with the Pass Book the following information was received:-
1. Cheques amounting to ₹ 7,290 were issued on 28th June, of which one cheque of ₹ 1,300 was
presented in the bank for payment on 4th July.
2. Cheques deposited into bank for ₹ 10,000, but of these cheques for ₹ 4,000 were cleared and
credited in July.

3. Interest and Dividend on investments ₹ 580 collected by bank and credited to his account but he did
not have any information for this.
4. Life Insurance Premium ₹ 750 paid by bank according to his standing orders.
5. Bank Charges ₹ 25 not recorded in the Cash Book.
Prepare a Bank Reconciliation Statement.

Answer:

Bank Reconciliation Statement

as on June 30, 2014
S. Plus
Minus Items
No Particulars Items
(Rs)
. (Rs)
Debit Balance as per Cash Book 1,500
Add: 1. Cheques issued but not presented for payment 1,300
3. Interest and Dividend collected by Bank 580

Less: 2. Cheques deposited but not yet credited by the bank 4,000
4. Life Insurance Premium paid by Bank 750
5. Bank charges not recorded in Cash Book 25
Debit Balance (Overdraft) as per Pass Book 1,395
4,775 4,775

Page No 15.29:

Question 5:

On comparing the Cash Book with Pass Book of Naman it is found that on March 31, 2017, bank
balance of ₹ 40,960 showed by the Cash Book differs from the bank balance with regard to the
following:
(a) Bank charges ₹ 100 on March, 31 2017, are not entered in the Cash Book.
(b) On March 21, 2017, a debtor paid ₹ 2,000 into the company's bank in settlement of his account,
but no entry was made in the Cash Book of the company in respect of this.
(c) Cheques totalling ₹ 12,980 were issued by the company and duly recorded in the Cash Book
before March 31, 2017, but had not been presented at the bank for payment until after that date.
(d) A bill for ₹ 6,900 discounted with the bank is entered in the Cash Book without recording the
discount charge of ₹ 800.
(e) ₹ 3,520 is entered in the Cash Book as paid into bank on March 31st 2017, but not credited by the
bank until the following day.
(f) No entry has been made in the Cash Book to record the dishonour on March 15, 2017 of a cheque
for ₹ 650 received from Bhanu.
Prepare a reconciliation Statement as on March 31, 2017.

Answer:

Bank Reconciliation Statement

as on March 31, 2017
S. Particulars Plus Minus Items
 Items
No. (Rs)
(Rs)
Debit Balance as per Cash Book 40,96
0
Add: (b) Amount directly paid by debtors 2,000
(c) Cheques issued but not presented for payment 12,98
0

Less: (a) Bank charges not recorded in Cash Book 100

(d) Discounting charges not recorded in Cash Book 800
(e) Amount deposited but not credited 3,520
(f) Cheque dishonoured but not recorded in Cash Book 650
Credit Balance as per Pass Book 50,870
55,94 55,940
0

Page No 15.29:

Question 6:

Prepare Bank Reconciliation Statement as on 31st January, 2017, if Cash Book of Mr. Sanjay showed
a credit balance of ₹ 20,100.
(i) The bank had paid fire insurance premium of ₹ 550 which does not appear in the Cash Book.
(ii) Cheques for ₹ 25,000 issued during January, but cheques for only ₹ 18,500 were presented for
payment.
(iii) Interest collected by bank ₹ 740.
(iv) Cheques of ₹ 8,700 were deposited into bank, but cheques for ₹ 7,000 were cleared till 31st
January, 2017.
(v) A customer deposited ₹ 620 directly into bank without informing Mr. Sanjay.

Answer:

Bank Reconciliation Statement

as on 31st January,2017
Plus Minus
S.
Particulars Items Items
No.
(₹) (₹)
Overdraft as per the Cash Book 20,100
(Cr.)
(i) Fire insurance not debited 550
(ii) Cheques not presented for 6,500
payment
(iii) Interest collected by bank not 740
recorded
(iv) Cheques not cleared by bank 1,700
(v) Deposited directly into bank 620
TOTAL 7,860 22,350
Balance as per Pass Book (Dr.) 14,490
Question 33:

Prepare a Bank Reconciliation Statement as on 31st March 2015 from the following informations:

₹
(a) Cash Book Balance (Overdraft) 12,500
(b) Cheques deposited but not recorded in Cash Book 2,000
(c) Cheque received but not sent to Bank 1,500
(d) Credit side of the Bank Column has been overcast 60
(e) Bank charges entered in Pass Book twice 75
(f) Bills Receivable directly collected by the Bank 4,000
(g) Deposited cheques returned dishonoured by Bank 1,700
(h) Electricity Bill paid by Bank as per instruction 800
(i) Cheques issued but not presented for payment 5,400
(j) Cheques deposited but not cleared 3,200

Answer:

Bank Reconciliation Statement

as on March 31, 2015
Plus
S. Minus
Particulars Items
No. Items (Rs)
(Rs)
Credit Balance (Overdraft) as per Cash Book 12,500
Add: (b) Cheque deposited but not recorded in Cash Book 2,000
(d) Credit side of Bank column was overcastted 60
(f) Bills Receivable collected by Bank 4,000
(i) Cheque issued but not presented for payment 5,400

Less: (c) Cheque received but not sent to bank 1,500

(e) Bank charges entered twice in Pass Book 75
(g) Deposited cheque was dishonoured 1,700
(h) Electricity bill paid as per standing instructions 800
(j) Cheque deposited but not credited 3,200
Debit Balance (Overdraft) as per Pass Book 8,315
19,77 19,775
5