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?
Correct answer: C. Rs. 28,000 favourable
- A. Rs. 18,000 favourable
- B. Rs. 22,000 favourable
- C. Rs. 28,000 favourable
- D. Rs. 36,000 favourable
Explanation
The bank balance is increased by unpresented cheques and reduced by deposits not yet credited. Therefore, Rs. 25,000 plus Rs. 7,000 minus Rs. 4,000 gives a favourable balance of Rs. 28,000.
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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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