Q.1. What is Bank Reconciliation Statement?
Ans. “Bank reconciliation statement is prepared periodically in order to find the reasons for disagreement between the bank pass book and the cash book balance of a bank and to test whether the frequently conflicting balances do really agree”.
Q.2. Name the different methods of preparing the bank reconciliation statement.
Ans. The bank reconciliation statement is down up in either of the following methods
a) Starting with cash book or pass book balance
b) Reconciliation with the adjusted cash book balance
c) Corrected method
Q.3. Write three advantages of preparing the Bank Reconciliation Statement?
Ans. Bank reconciliation statement is prepared to achieve the following advantages.
- Any mistake in cashbook and passbook is detected.
- Through the preparation of bank Reconciliation statement true bank
balance can be ascertained.
- Any delay in collecting a cheque is detected and necessary steps are taken.
Q.4. Write down two points of difference causing disagreement between cash book and pass book?
Ans. The following are the main reasons of disagreement.
a) Cheques deposited for collection but not yet collected or credited by the bank.
b) Cheques issued or drawn but not yet paid by bank.
Q.5. What is Cash book?
Ans. The cash book is a book of original entry in which all receipts and payments are recorded. On the debit side of cash book the receipts are entered and in the credit side payment are recorded.
Q.6. What is pass book?
Ans. It is supplied by the bank to his customer. It is a true copy of the customer account in the bank ledger. All the amounts paid in to and withdrawn from the bank are recorded in this book.
Q.7.What is bank Statement?
Ans. The bank statement serves the same purpose to the depositor as pass book. The bank some time instead of providing pass book it sends bank statement after a certain interval to a depositor, which is called as bank statement.
Q.8. What is favourable balance?
Ans. By favourable balance we mean cash at bank. Debit balance of cash book and credit balance of pass book are favourable balance to the customer.
Q.9. What is unfavourable balance?
Ans. By unfavourable balance we mean as overdraft balance. Credit balance of cash book and Debit balance of pass book are unfavourable balance to the customer.
Q.10. What are the unpresented cheques?
Ans. These are the cheques which have been issued to the creditors or others and have credited in the bank column of the cash book and these cheques have not yet been presented to the bank for payment.
Q.11. What are the uncollected cheques?
Ans. Cheques, draft etc, deposited or paid in the bank for collection but they have not yet been collected, credited or cleared by the bank.
Q.12. What are omitted cheques?
Ans. Cheque received from the debtors but unrecorded in the book due to some reasons are called omitted cheques. They are of two types.
- i. They may be omitted to record.
- ii. They may be omitted to deposit.
Q.13. What are dishonored cheques?
Ans. When the cheques are returned by the bank unpaid due to any reason, they are called dishonored cheques. -
Q.14. What are honoured cheques?
Ans. When bank pays the amounts of the cheques on demand then they are called as honoured cheques.
Q.15. What is payment understanding order?
Ans. When the payments are made by the bank under the instruction of the customer and they are recorded in the pass book are called payment understanding order.
Q.16. What is a bank draft?
Ans. It is an order given by one bank to its branch requesting the latter to pay a specified sum of money to the person named there in. it is one of the methods of remitting money from one place to another through bank.
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