The bank statement shows bank interest of Rs. 2,500 credited to the business account, but the amount is absent from the cash book. What is the correct treatment?
Correct answer: A. Debit the bank column of the cash book
- A. Debit the bank column of the cash book
- B. Credit the bank column of the cash book
- C. Debit the bank reconciliation statement
- D. Credit the bank reconciliation statement
Explanation
Bank interest increases the business's bank balance, so the bank column of the cash book is debited. The item is first entered in the cash book before any reconciliation is prepared.
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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.
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34 free Bank Reconciliation and Control Accounts MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
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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.
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