A bank statement contains an erroneous debit of Rs. 12,000 made by the bank. How should this item be treated in the bank reconciliation?
Correct answer: A. Add Rs. 12,000 to the bank statement balance and notify the bank
- A. Add Rs. 12,000 to the bank statement balance and notify the bank
- B. Add Rs. 12,000 to the cash book balance and notify the bank
- C. Subtract Rs. 12,000 from the cash book balance as bank charges
- D. Record Rs. 12,000 as a credit sale in the cash book
Explanation
The bank has reduced the statement balance incorrectly, so the amount is added back when reconciling the statement. It should not be entered in the cash book because the business has not made this transaction.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
About Bank Reconciliation and Control Accounts
Bank reconciliation explains differences between the cash book and bank statement through unpresented cheques, outstanding deposits, bank charges, direct payments, credited amounts and recording errors. Control accounts summarise receivables and payables ledgers, and their balances are reconciled with individual accounts to locate discrepancies.
Practise Bank Reconciliation and Control Accounts
34 free Bank Reconciliation and Control Accounts MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Accounting questions like this
Accounting is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Bank Reconciliation and Control Accounts questions
A difference between the sales ledger control account and the total of individual customer balances may arise when a transaction is recorded in the control account but omitted from the personal accounts. Which transaction is most likely to cause this difference?
A business has opening trade receivables of Rs. 80,000, credit sales of Rs. 300,000, receipts from customers of Rs. 250,000, sales returns of Rs. 10,000, discounts allowed of Rs. 5,000, and bad debts of Rs. 8,000. What is the closing trade receivables balance?
Which item is normally recorded on the debit side of the purchases ledger control account?
The cash book shows a favourable bank balance of Rs. 25,000. Unpresented cheques total Rs. 7,000 and deposits in transit total Rs. 4,000. What balance should appear on the bank statement?
The cash book shows a bank overdraft of Rs. 18,000. Unpresented cheques are Rs. 5,000 and deposits in transit are Rs. 3,000. What overdraft should appear on the bank statement?
A cheque received from a customer is dishonoured by the bank after it has been recorded as a receipt in the cash book. What entry is required?