CAF 1 – Bank Reconciliation Statement
Bank Reconciliation
Statement
-
07
Page | 1
CASH AT BANK
Cash book /
Bank book
Bank
statement /
Pass Book
Difference
The cash book provides us with the balance we have in our bank account
and for each bank account separate record is maintained.
Normal / Favourable balance  Debit
Overdrawn / Overdraft / Unfavourable balance  Credit
The bank also provides us with a statement of our account. This statement
records transactions from bank point of view, therefore, debits and credits
are reversed in it.
Normal / Favourable balance  Credit
Overdrawn / Overdraft / Unfavourable balance  Debit
In ideal situation, the balance from both should match. However, due to
errors and omissions and due to timing differences, the balance may differ
which needs to be reconciled in order to ensure that there is no
embezzlement etc.
.
Adjustment in
Errors and omissions
Errors and omissions (items not yet recorded)
in cash book
Errors and omissions (items not yet recorded)
in bank statement
Timing difference
Un-presented items: these are items credited in
cash book but will be debited by bank after
period end
Uncredited items / un-cleared items: these are
items deposited in bank account but bank will
credit them after the year end.
Possible
reason of
differences
Cash Book
Bank Reconciliation
Statement
Bank Reconciliation
Statement
Bank Reconciliation
Statement
.
Adjusted
balance
This is the balance as per cash book after all the errors and omissions in
cash book have been corrected and adjusted. This is also called true
balance of cash and this is the amount used in statement of financial
position.
This figure is also used as starting point for preparing bank reconciliation
statement.
© kashifadeel.com
CAF 1 – Bank Reconciliation Statement
BANK RECONCILIATION STATEMENT
Balance as per cash book (adjusted)
Page | 2
Normally, debit
Un-presented items
Un-cleared, un-credited items
Debit
Credit
Error by bank: bank wrongly debited
Error by bank: bank wrongly credited
Credit
Debit
Items
Balance as per bank statement
Normally, credit
.
Particulars
Ref.
Balance as per cash book (adjusted)
Un-presented cheques
Un-credited cheques
Specimen
Dr.
(Rs)
XXX
XX
Cr.
(Rs)
XX
Error by bank
Balance as per bank statement
Total
XX
XXX
XX
XXX
XXX
.
SYLLABUS
Reference
Content/Learning outcome
Bank reconciliation and related adjustments
Understand the need for a bank reconciliation
Identify the main reasons for differences between the cash book and bank
LO2.3.2
statements.
Prepare a bank reconciliation statement in the circumstance of simple and well
LO2.3.3
explained transactions.
Correct cash book errors and post journal entries after identifying the same in
LO2.3.4
bank reconciliation statement
Proficiency level: 2
Testing level: 2
B3
LO2.3.1
Past Paper Analysis
A14 S15 A15 S16
14
09
14
A16
10
S17
09
A17
-
S18
08
Latest update: April 2020
A18
-
S19
-
A19
08
S20
01
CAF 1 – Bank Reconciliation Statement
PRACTICE Q&A
Sr.#
1H
2C
3C
4H
5H
6H
7H
8C
9C
10C
11H
12H
13C
14C
Description
Marks
Sohrab – BRS
04
Jabbar – Cash book and BRS
07
BRS reverse calculations
06
Al – Murtaza
10
ABC Textiles
15
Mr. Mubarak
15
Ranjha Enterprises
09
Galaxy Enterprises
14
Eden Garments
10
Comforts Travels
09
A Company
06
Badami Enterprises
14
Unique Traders - BRS from last month BRS and current
08
month Bank Book and Bank statement
Lamda Establishment
08
© kashifadeel.com
Reference
ST
ST
QB
QB
QB
QB
PE A15
PE S16
PE A16
PE S17
QB
PE S15
PE S18
PE A19
Page | 3
CAF 1 – Bank Reconciliation Statement
QUESTION
01
On 30 June the cash account of Sohrab’s business showed a balance at bank of Rs.
1,500,000.
Page | 4
The bank statements showed that cheques for Rs. 70,000, Rs.90,000 and Rs.100,000 had
not been presented for payment and that lodgments totaling Rs.210,000 had not been
cleared.
The balance on the bank statement at 30 June was Rs. 1,550,000.
Required
Prepare a bank reconciliation.
(04)
QUESTION
02
The balance in Jabbar’s cash account at 30 June showed an asset of Rs.1,660,000. His
bank statement showed an overdraft of Rs.450,000.
On reconciling the cash account he discovers the following.
(a)
The debit side of the cash account had been undercast by Rs.200,000.
(b)
A total on the receipts side of the cash account of Rs.2,475,000 had been brought
forward as Rs.4,275,000.
(c)
A cheque received by Jabbar for Rs.220,000 had bounced.
(d)
Bank charges of Rs.184,000 had been omitted from the cash account.
(e)
Un-presented cheques totalled Rs.520,000 and un-cleared lodgements Rs.626,000.
Required
Prepare a bank reconciliation.
(07)
QUESTION
03
A company receives a bank statement showing a credit balance of Rs.7,400,000. On
investigation, its accountant discovers that the bank statement does not show cheques
received from customers for Rs.16,200,000 and banked, or cheque payments to suppliers
for Rs.18,500,000. The bank statement also shows bank charges of Rs.250,000, which have
not yet been recorded in the ledger.
Required
What is the current balance on the cash book? (This is the balance on the Bank account in
the main ledger.)
(06)
QUESTION
04
Following information has been collected from the books of Al-Murtaza Company, as at
August 31, 2013:
(a)
(b)
(c)
Balance as per bank book Rs. 272,178
Cash balance on bank statement Rs. 227,522
Cheques outstanding on August 31 were as follows:
Cheque No.
Rupees
670
13,353
679
14,152
690
17,108
996
3,535
997
14,430
999
23,629
Latest update: April 2020
CAF 1 – Bank Reconciliation Statement
(d)
The company made the following payments into the bank in the last week in August
but these had not yet appeared on the bank statement.
Rupees
83,250
144,641
(e)
The following matters have been discovered.
(i)
Receipt of Rs. 15,000 was erroneously recorded on the credit side of the
bank book.
(ii)
A payment of Rs. 12,480 was erroneously recorded on the debit side of the
bank book.
(iii)
The credit side of the bank book has been over casted by Rs. 4,800.
(iv)
The bank statement showed an amount collected by the bank but not shown
in the cash book in the amount of Rs. 87,188.
Required:
Prepare the bank reconciliation as at 31 August.
(10)
QUESTION
05
While reconciling the bank statement with the cash/bank book of ABC Textiles for the year
ended December 31, 2013, you noted the following:
Rupees
(i)
Balance as per bank statement at December 31, 2013, overdrawn
806,436
(ii)
Cheques drawn but not presented till December 31, 2013
377,784
(iii)
Mark-up on overdraft charged by the bank on January 2, 2014 was
118,686
recorded in the cash/bank book on December 31, 2013
(iv)
Collections made on December 30 and 31, 2013 were not lodged
250,600
with the bank till January 3, 2014
(v)
A bill which was due on December 29, 2013 was sent to the bank for
collection on December 28, 2013, and entered in the cash/bank book. 196,500
However, the proceeds were credited by the bank on January 1, 2014
(vi)
Subscription for a magazine was paid by the bank, as per the autodebit instructions, on December 1, 2013. This transaction has not
3,144
been recorded in the cash/bank book so far
(vii)
A time-barred cheque was replaced with a new cheque on December
30, 2013 and entered in the cash/bank book without the previous
5,000
cheque being cancelled / reversed. Both the cheques are included in
(ii) above
(viii)
Discount allowed on prompt payment to customers has been
10,500
included in the cash/bank book
(ix)
A cheque received on December 21 was erroneously recorded on the
7,500
credit side of the cash/bank book
(x)
A cheque issued to a supplier was time-barred as of January 2, 2014
25,000
(xi)
A cheque for Rs. 125,000 drawn by the company to pay for a new
12,500
item of plant had been mistakenly entered in the cash/bank book as
(xii)
A cheque issued by the company has been entered in the credit
13,200
column of the bank statement
Required:
Prepare a bank reconciliation statement as at December 31, 2013 and identify the amount to
be carried to the statement of financial position as “Cash at Bank”.
(15)
© kashifadeel.com
Page | 5
CAF 1 – Bank Reconciliation Statement
QUESTION
06
Mr. Mubarak is a sole trader and carries on business under the name “Mubarak &
Company”. The balance on his cash book at 31 December 2013 did not agree with the
balance as per the bank statement which shows a credit balance of Rs. 367,500.
Page | 6
An examination of the cash book and bank statement disclosed the following:
(i)
A deposit of Rs. 49,200 made on 29 December 2013 had been credited by the bank
on 1 January 2014.
(ii)
Bank charges of Rs. 1,700 have not been entered in the cash book.
(iii)
A debit of Rs. 4,200 appeared on the bank statement for an unpaid cheque which
has been returned marked “out of date”. The cheque was re-dated by his customer
and paid into the bank again on 3 January 2014.
(iv)
A standing order for payment of an annual subscription amounting to Rs. 1,000 has
not been entered in the cash book.
(v)
On 26 December 2013, Mr. Mubarak had given the cashier a cheque for Rs. 10,000
to pay into his personal account at the bank. The cashier deposited it into the
business account by mistake.
On 27 December 2013, a customer had made an online transfer of Rs. 49,900 in
payment against goods supplied. The advice was received and recorded in the cash
book on 2 January 2014.
(vi)
(vii)
On 30 September 2013, Mr. Mubarak entered into a hire purchase agreement and
issued a standing order to the bank to pay a sum of Rs. 2,600 on the 10th day of each
month, commencing from October 2013. No entries have been made in the cash
book for these payments.
(viii)
A cheque for Rs. 36,400 received from Mr. Bashir had been entered twice in the cash
book.
(ix)
Cheques issued amounting to Rs. 467,200 had not been presented to the bank for
payment until after 31 December 2013.
(x)
A customer who owed Rs. 20,000 and was entitled to a cash discount of 2½% paid a
cheque for the net amount on 10 December 2013. The cashier erroneously recorded
the gross amount in the bank column of the cash book.
(xi)
Dividend collected by the bank amounting to Rs. 12,000 has not been recorded in the
cash book.
(xii)
A cheque of Rs. 243,000 received from Mr. Bilal was deposited in the bank but
entered in the cash book as Rs. 234,000.
Required:
(a)
Prepare a bank reconciliation statement as on 31 December 2013.
(b)
Prepare necessary journal entries in the books of Mubarak & Company and
determine the correct cash balance that should be reported in the statement of
financial position. Also specify the situations in which no adjustment/entry is required.
(15)
Latest update: April 2020
CAF 1 – Bank Reconciliation Statement
QUESTION
07
On 30 June 2015, the bank book of Ranjha Enterprises (RE) reflected a credit balance of
Rs. 3,450,000 whereas the bank statement showed an overdraft of Rs. 2,415,000. On
scrutinizing the record, following issues were discovered:
(i)
Cheques deposited in bank in the last week of June 2015, amounting to Rs.
1,550,000 were wrongly credited in the bank book. Out of these, cheques amounting
to Rs. 1,050,000 were cleared by the bank in July 2015 whereas a cheque of Rs.
500,000 deposited on 29 June 2015 was dishonoured by the bank on 2 July 2015.
(ii)
Financial charges on bank overdraft amounting to Rs. 750,000 were recorded in the
bank statement. However, review by the Accounts Officer indicated an error and RE
recorded the correct amount of Rs. 510,000 in the bank book. The error was
corrected by the bank on 10 July 2015.
(iii)
A cheque issued to a supplier amounting to Rs. 4,005,000 was entered in the bank
book as Rs. 4,050,000. However, the bank erroneously recorded the amount as Rs.
4,500,000.
(iv)
A supplier was issued a cheque of Rs. 125,000 in place of a time barred cheque on
25 June 2015 and was cleared on the next day. However, the cancellation of time
barred cheque was not recorded by RE.
(v)
A payment of Rs. 50,000 through cheque was recorded twice in the bank book.
Required:
Determine the correct balance that should be reported in the bank book and prepare a
statement reconciling the corrected balance with that shown in the bank statement.
(09)
QUESTION
08
Galaxy Enterprises (GE) maintains a bank account with Zee Bank Limited. Following
information pertains to the bank account for the month of January 2016:
Bank book
Bank statement
Balance as at 31 January 2016
(Dr.) Rs. 856,000
(Cr.) Rs. 1,182,500
Other information:
(i)
Following is the list of outstanding cheques as at 31 January 2016:
Cheque no.
Date
Rupees
111
14-Jul-2015
250,000
444
23-Nov-2015
79,000
666
15-Dec-2015
455,000
777
28-Jan-2016
500,000
Various
31-Jan-2016
1,350,000
Review of outstanding cheques revealed that incorrect payee's name was mentioned
on cheque no. 666. Cheque no. 777 was issued to replace cheque no. 666. The
difference of Rs. 45,000 represents payment against another invoice.
(ii)
Cheques outstanding for more than six months are not honoured by banks.
© kashifadeel.com
Page | 7
CAF 1 – Bank Reconciliation Statement
(iii)
Details of un-cleared cheques as at 31 January 2016 are as follows:
Date
Customer’s name
Cheque no.
Rupees
8-Oct-2015
Zeta Enterprises
1XX
140,000
3-Dec-2015
XYZ Traders
2XX
70,000
26-Dec-2015
ABC & Co.
3XX
63,000
31-Jan-2016
Various customers
Various
1,780,000
 Cheque no. 1XX was dishonoured on 28 January 2016.
 Cheque no. 2XX was mistakenly credited by the bank to another party. GE’s
account was however credited on 8 February 2016.
(iv)
A debit of Rs. 135,000 is appearing in the bank statement of January 2016. It
represents reversal of a credit given in December 2015 against a post-dated cheque
of 1 March 2016 which was mistakenly deposited by GE.
(v)
A reconciling item of Rs. 9,000 is appearing in the bank reconciliation statement from
December 2015. It represents the difference between a cheque of Rs. 54,000
received from a customer and recorded by GE at Rs. 45,000. The error could not be
identified in December 2015.
Page | 8
(vi)
Following debit advices dated 29 January 2016 were received by GE in February
2016:
 Bank charges amounting to Rs. 8,500.
 Payments of Rs. 120,000 for annual subscriptions against standing
instructions.
Required:
(a)
Compute corrected Bank book balance and prepare necessary journal entries to
correct the errors in the Bank book.
(11)
(b)
Prepare a bank reconciliation statement for the month of January 2016. (03)
QUESTION
09
Following information has been extracted from the records of Eden Garments (EG), as at 30
June 2016:
Rupees
Balance as per bank book (debit balance)
760,000
Balance as per bank statement (overdraft)
1,490,850
An examination of the bank book and the bank statement, revealed the following:
(i)
Outstanding cheques amount to Rs. 3,856,300 and include:
 a cheque of Rs. 50,000 issued to a supplier bearing an incorrect payee's name.
The cheque was returned and recorded on 15 July 2016.
 a cheque issued to a supplier for Rs. 85,000 (included in above amount correctly)
was recorded in bank book as Rs. 58,000.
 a cheque dated 20 December 2015 for Rs. 4,630 issued for repair of a car was
misplaced. The repair charges were paid in cash and the misplacement of the
cheque was not recorded.
(ii)
Un-cleared cheques amount to Rs. 6,460,000 and include:
 a cheque of Rs. 366,000 received from a customer was returned by the bank as
amount in words was not in conformity with the amount in figures. The return was
not recorded and the cheque was sent to the customer for replacement.
 a cheque of Rs. 76,000 received from a customer in settlement of an invoice
availing payment discount of 5%. The collection was recorded by EG at gross
amount of invoice.
Latest update: April 2020
CAF 1 – Bank Reconciliation Statement
(iii)
An unidentified credit of Rs. 354,000 was appearing in the bank statement. It was
found that a customer had made an online transfer to avail 5% discount allowed on
payments made by 30 June 2016.
(iv)
Following debit/credit advices dated 30 June 2016 were received from the bank on 5
July 2016:
 Bank charges amounting to Rs. 7,850. It has been noted that the bank had over
charged EG by Rs. 1,250.
 Dividend collected by the bank amounting to Rs. 50,000.
 Payment on EG’s standing instruction of an annual subscription for a magazine
amounting to Rs. 12,000.
Required:
(a)
Post relevant transactions to bank book of EG to arrive at the correct bank balance
as at 30 June 2016.
(07)
(b)
Prepare a bank reconciliation statement for the month of June 2016 to arrive at the
adjusted bank balance as per EG's books.
(03)
QUESTION
10
The following bank reconciliation statement pertains to Comforts Travels for the month of
February 2017:
Rupees
Balance as per bank statement
3,258,000
Outstanding cheques
(869,200)
Cheques deposited and under clearance
456,350
Debit advices for bank charges received in March 2017
9,240
Un-reconciled difference
(9,000)
Balance as per bank book
2,845,390
Scrutiny of the bank book and bank statements revealed the following:
(i)
Outstanding cheques above include:
 a cheque of Rs. 37,250. The cheque was recorded in the bank book (and in
above reconciliation) as Rs. 32,750.
 a cheque amounting to Rs. 9,650 which is outstanding since 8 June 2016.
Cheques outstanding for more than six months are not honoured by the bank.
(ii)
Cheques under clearance include a post-dated cheque of Rs. 35,000 received from a
customer on 27 February 2017. The cheque was deposited in the bank on 28
February 2017. The date of the cheque was 1 March 2017.
(iii)
The bank charges include an amount of Rs. 2,500 which was subsequently reversed
by the bank.
(iv)
A page total of payment side of the bank book amounting to Rs. 4,589,000 was
carried forward to the next page as Rs. 4,598,000.
Required:
(a) Post relevant transactions to the bank book to arrive at the correct balance as at 28
February 2017.
(05)
(b) Prepare a revised bank reconciliation statement for the month of February 2017 using
the corrected bank book balance.
(04)
© kashifadeel.com
Page | 9
CAF 1 – Bank Reconciliation Statement
QUESTION
Page | 10
11
A company receives a bank statement. The balance on its cash book (= bank account in the
main ledger) is a debit balance of Rs.1,600,000. In reconciling the cash book balance with
the bank statement balance, the accountant discovers that the bank statement does not
show cheques received from customers for Rs.8,200,000 and banked, or cheque payments
to suppliers for Rs.4,700,000. The bank statement also shows bank charges of Rs.150,000,
a direct debit payment of Rs.400,000 and a dishonoured cheque for Rs.300,000. None of
these three items which has yet been recorded in the ledger.
Required
What is the balance on the bank statement?
What entries should be made in the company’s ledger accounts when the cash book and the
bank statement balances have been reconciled?
(06)
QUESTION
12
a)
State any ten causes of disagreement between the balance as per bank book and
the bank statement.
(05)
b)
On 31 December 2014 the bank book of Badami Enterprise (BE) reflected a
favourable balance of Rs. 34,000 while the bank statement showed an overdraft of
Rs. 1,712,000.
On scrutinizing the two records, following discoveries were made:
(i)
Cheques of Rs. 325,000 issued to suppliers were not yet presented to the
bank.
(ii)
Bank made payment of Rs. 35,000 in relation to e-payment charges on BE’s
account.
(iii)
BE had instructed the bank to transfer interest of Rs. 45,000 earned on a
deposit account to its current account. The bank did not transfer the amount
till 15 January 2015 whereas the amount had already been recorded in the
bank book.
(iv)
Cheques of Rs. 630,000 received from customers and deposited to the bank
had not been credited by the bank.
(v)
The receipt side of the bank book was overcasted by Rs. 90,000.
(vi)
The payment side of the bank book was undercasted by Rs. 42,000.
(vii)
BE made e-payments of Rs. 720,000 to overseas suppliers. However, these
payments were not posted to the bank book.
(viii) A cheque of Rs. 30,000 drawn in favour of a supplier was recorded in the
bank statement as Rs. 300,000.
(ix)
A cheque of Rs. 65,000 issued to one of the suppliers had been wrongly
posted on the receipt side of the bank book.
(x)
A cheque of Rs. 80,000 received from Mr. Barkat had been entered twice in
the bank book.
(xi)
Dividend of Rs. 54,000 collected by the bank was recorded at Rs. 63,000 in
the bank book.
(xii)
A standing order for payment of annual subscription fees of Rs. 20,000 for a
magazine had not been recorded in the bank book.
Required:
Determine the correct balance that should be reported in the bank book and prepare
a bank reconciliation statement reconciling the amended balance with that shown in
the bank statement.
(09)
Latest update: April 2020
CAF 1 – Bank Reconciliation Statement
QUESTION
13
Following information has been extracted from the records of Unique Traders:
Date
01
05
09
12
18
25
26
28
Bank book for the month of February 2018
Receipts
Rupees Date
Payments
Balance
133,500
03
Salaries
Debtors
315,000 05
Utilities
Sales
525,000 08
Purchases
Rentals
615,000
15
Rental
Security deposit
200,000 20
Purchases
Advance from customers
182,000 28
Balance
Debtors
294,000
Cash deposited in bank
55,000
2,319,500
Cheque
X09
X10
X11
X12
X13
Rupees
225,000
352,000
622,000
608,000
71,000
441,500
2,319,500
Bank statement for the month of February 2018
Date
Description
Cheque Withdrawals Deposits Balance
--------------- Rupees --------------01
Balance
127,500
03 Cheque withdrawal
X09
225,000
(97,500)
05 Reversal of credited mistakenly
48,000
(145,500)
09 Cheque withdrawal
X05
63,000
(208,500)
14 Outward cheque clearing
315,000
106,500
20 Outward cheque clearing
525,000
631,500
22 Cheque withdrawal
X10
325,000
306,500
24 Payment – standing instructions
15,000
291,500
25 Outward cheque clearing
615,000
906,500
26 Outward cheque clearing
200,000 1,106,500
26 Transfer (from a debtor)
38,000
1,144,500
27 Cheque returned
200,000
944,500
28 Cheque withdrawal
X12
608,000
336,500
28 Cheque withdrawal
X13
71,000
265,500
28 Cash deposit
55,000
320,500
28 Bank charges
4,500
316,000
1,559,500
1,748,000
(All amounts appearing in the above bank statement are correct)
Bank reconciliation statement as on 31 January 2018
Description
Bank book
Bank Statement
---------- Rupees ---------Balance
(133,500)
127,500
Un-presented cheques:
Cheque X05 dated 28 January 2018
(63,000)
Cheque X06 dated 31 January 2018
(150,000)
Amount mistakenly credited by bank
(48,000)
Corrected balance
(133,500)
(133,500)
Required:
Prepare bank reconciliation statement as on 28 February 2018, showing the correct balance
as per bank book and bank statement.
(08)
© kashifadeel.com
Page | 11
CAF 1 – Bank Reconciliation Statement
QUESTION
Page | 12
14
Lamda Establishment is preparing bank reconciliation statement on 30 June 2019. In this
respect, the following information is available:
(i)
Cash book showed an overdrawn balance of Rs. 3,928,000.
(ii)
Cheques outstanding as at 30 June 2019 amounting to Rs. 1,250,000 included:
 a cheque of Rs. 10,000 dated 8 December 2018 issued to a welfare organization
for donation.
 a cheque of Rs. 150,000 dated 20 June 2019 mailed to a supplier on 10 July
2019.
(iii)
A cheque of Rs. 391,000 issued to a supplier was recorded in the cash book as Rs.
319,000.
(iv)
(Cheques received from customers amounting to Rs. 670,000 were recorded in the
cash book but not credited in bank statement. These cheques included a cheque
dated 10 July 2019 amounting to Rs. 25,000 received from a customer on 28 June
2019.
(v)
A bank debit advice dated 30 June 2019 for interest charges amounting to Rs.
80,000 was received in July 2019.
Required:
(a) Compute the corrected cash book balance as at 30 June 2019.
(04)
(b) Compute the bank balance as would be appearing in the bank statement as at 30 June
2019.
(04)
Latest update: April 2020
CAF 1 – Bank Reconciliation Statement
ANSWER
01
Particulars
Balance as per cash book (adjusted)
Un-presented cheques [70,000 + 90,000 + 100,000]
Un-credited cheques
Balance as per bank statement
Total
Ref.
Dr. (Rs)
1,500,000
260,000
Cr. (Rs)
210,000
1,550,000
1,760,000
1,760,000
ANSWER
02
b/d
Under-casting debit side (a)
c/d
Cash Book (Bank column)
1,660,000
Error (b) 4,275,000 – 2,475,000
200,000
Dishonoured cheque (c)
Bank charges (d)
344,000
2,204,000
Particulars
Balance as per cash book (adjusted)
Un-presented cheques
Un-credited cheques
Balance as per bank statement
Total
Ref.
Dr. (Rs)
(e)
(e)
520,000
2,204,000
Cr. (Rs)
344,000
626,000
450,000
970,000
ANSWER
970,000
03
CONNOLLY
Bank Reconciliation Statement (As at xx-xx-xxx)
Particulars
Ref
Dr. (Rs ‘000)
Balance as per cash book β
5,100
Un-presented cheques
18,500
Un-credited cheques
Balance as per bank statement
Total
23,600
b/d
1,800,000
220,000
184,000
Connolly Cash Book (Bank column)
5,350
Bank charges
c/d
5,350
© kashifadeel.com
Cr. (Rs ‘000)
16,200
7,400
23,600
250
5,100
5,350
Page | 13
CAF 1 – Bank Reconciliation Statement
ANSWER
Page | 14
04
AL-MURTAZA COMPANY
Bank Reconciliation Statement
As at August 31, 2013
Particulars
Ref
Balance as per cash book W1
Un-presented cheques [c]
670
679
690
996
997
999
Un-credited amounts [d] (83,250 + 144,641)
Balance as per bank statement (b)
Total
Dr. (Rs)
369,206
13,353
14,152
17,108
3,535
14,430
23,629
455,413
W1 – Al-Murtaza Company Cash Book (Bank column)
b/d (a)
272,178
Payment (e)(ii)
Revenue (e)(i)
30,000
Overcasting (e)(iii)
4,800
Receivables (e)(iv)
87,188
c/d
394,166
ANSWER
Cr. (Rs)
227,891
227,522
455,413
24,960
369,206
394,166
05
ABC TEXTILES
Bank Reconciliation Statement
As at December 31, 2013
Particulars
Ref
Dr. (Rs)
Balance as per cash book W1
Un-presented cheques 377,784 – 5,000
(ii), (vii)
372,784
Un-credited cheques
(iv)
(v)
Error by bank 13,200 x 2 times
(xii)
26,400
Balance as per bank statement
(i)
806,436
Total
1,205,620
W1 – ABC Textiles Cash Book (Bank column)
Mark-up (iii)
118,686
b/d β
Time barred cheque (vii)
5,000
Discount allowed (viii)
Recording error 7,500 x 2 times (ix)
15,000
Error (125,000 – 12,500) (xi)
c/d
758,520
Magazine subscription (vi)
897,206
Cr. (Rs)
758,520
250,600
196,500
1,205,620
771,062
10,500
112,500
3,144
897,206
In point (x) the time barred cheque is an event after the relevant period. The cheque will be
considered cancelled when it will become time-barred.
Latest update: April 2020
CAF 1 – Bank Reconciliation Statement
ANSWER
06
MUBARAK & COMPANY
Bank Reconciliation Statement
As at December 31, 2013
Ref
Dr. (Rs)
Particulars
Balance as per cash book β
Un-presented cheques
Un-credited cheques
Balance as per bank statement
Total
(ix)
(i)
given
Cr. (Rs)
50,500
467,200
467,200
49,200
367,500
467,200
W1 – ABC Textiles Cash Book (Bank column)
Mr. Mubarak (wrong deposit) (v) 10,000
b/d β
Receivables (vi)
49,900
Bank charges (ii)
Receivables (cheque returned) (iii)
Dividend (xi)
12,000
Mr. Bilal (recording error) (xii)
9,000
Annual subscription (iv)
Vendor (2,600 x 3 (vii))
Mr. Bashir (entered twice) (viii)
c/d
50,500
Discount allowed (x)
131,400
Journal entries
Bank charges
(ii)
1
Bank
79,800
1,700
4,200
1,000
7,800
36,400
500
131,400
1,700
1,700
(iii)
2
Receivables
Bank
4,200
(iv)
3
Annual subscription
Bank
1,000
(v)
4
Bank
10,000
(vi)
5
(vii)
6
Hire purchase vendor
Bank
7,800
(viii)
7
Mr. Bashir
Bank
36,400
(x)
8
Discount allowed
Bank
(xi)
9
(xii)
10
4,200
1,000
Mr. Mubarak
10,000
Bank
49,900
Receivables
49,900
7,800
36,400
500
500
Bank
12,000
Dividend
12,000
Bank
9,000
Mr. Bilal
9,000
Corrected cash book (bank column) balance: (79,800) + 80,900 – 51,600 = (50,500)
© kashifadeel.com
Page | 15
CAF 1 – Bank Reconciliation Statement
ANSWER
Page | 16
Wrong side recording error
1,550,000 x 2 (i)
Cheque issued error
4,005,000 – 4,050,000 (iii)
Time barred cheque (iv)
Twice recorded (v)
Balance c/d
07
Ranjha Enterprises
Bank Book
Balance b/d
3,100,000
Dishonored cheque (i)
45,000
125,000
50,000
630,000
3,950,000
Ranjha Enterprise
Bank Reconciliation Statement as at 30 June 2015
Particulars
Dr. Rs.
Balance as per cash book
Un-credited cheques 1,550,000 – 500,000 dishonored
(i)
Bank error (charges wrongly recorded) 750,000 – 510,000
(ii)
Bank error 4,005,000 – 4,500,000
(iii)
Balance as per bank statement (overdrawn)
2,415,000
TOTAL
2,415,000
ANSWER
3,450,000
500,000
3,950,000
Cr. Rs.
630,000
1,050,000
240,000
495,000
2,415,000
08
Part (a)
Galaxy Enterprises
Corrected bank book balance
Bank Book
b/d
856,000
Dishonoured cheque
Reversal of time barred cheque
Reversal of post-dated cheque
250,000
Reversal cheque incorrect name
455,000
Bank charges
Correction in customer cheque
9,000
Subscription charges
c/d
1,570,000
Correction journal entries for the month of January 2016
Date
Description
2016
31-Jan Bank
Accounts payable
Reversal of time barred cheque # 111
31-Jan Bank
Accounts payable
Reversal of cheque # 666 issued with an incorrect
name
31-Jan Accounts receivable
Bank
Reversal of dishonored cheque # 1XX
31-Jan Accounts receivable
Bank
Reversal of post-dated cheque of 1 March 2016
mistakenly presented to the bank in De. 2015
Latest update: April 2020
140,000
135,000
8,500
120,000
1,166,500
1,570,000
Debit
Credit
-------Rupees------250,000
250,000
455,000
455,000
140,000
140,000
135,000
135,000
CAF 1 – Bank Reconciliation Statement
31-Jan
Bank
31-Jan
Receivable
Correction of a customer’s cheque of Rs. 54,000
mistakenly recorded as Rs. 45,000
Bank charges
Subscription charges
Bank
To record bank charges and annual subscription paid
9,000
9,000
8,500
120,000
128,500
Part (b)
Bank reconciliation statement for the month of January 2016
Corrected bank book balance
Less: Cheques issued but not presented for payments:
444
777
Various
Add: Cheques deposited into the bank but not yet cleared
2XX
3XX
Various
Balance as per bank statement
Dr
Rs.
1,166,500
Cr
Rs.
79,000
500,000
1,350,000
3,095,500
ANSWER
70,000
63,000
1,780,000
1,182,500
3,095,500
09
Part (a) Eden Garments
Date
30-06
Description
Balance b/d
(i)
(i)
(iii)
Account payable
Repair charges
Account receivable
(iv)
Dividend income
Bank account
Rupees
Date
Description
(i)
Account payable
760,000
( 85,000-58,000)
50,000
(ii)
Account receivable
4,630
(ii)
Discount expense (76,000
354,000
/ 0.95) - 76,000
(iv)
Bank charges
50,000
(7,850-1,250)
(iv)
Subscription charges
30-06 Balance c/f
1,218,630
© kashifadeel.com
Rupees
27,000
366,000
4,000
6,600
12,000
803,030
1,218,630
Page | 17
CAF 1 – Bank Reconciliation Statement
Part (b)
Page | 18
Balance as per bank book
Cheques issued by EG but not yet paid by the bank:
As given in question paper
Cheque returned from the bank now recorded
Misplaced cheque now reversed
Dr.
Rs.
803,030
Cr.
Rs.
3,856,300
(50,000)
(4,630)
3,801,670
Cheques deposited but not credited by the bank:
As given in question paper
Cheque deposited and returned by the bank now recorded
Bank charges over charged
Unidentified difference (balancing)
Balance as per bank statement – overdraft
6,460,000
(366,000)
6,094,000
1,250
300
(1,490,850)
6,095,550
6,095,550
ANSWER
10
Part (a)
b/d
Payables (i)
Suspense (iv)
[4,598,000 – 4,589,000]
Cash Book (Bank column)
2,845,390
Payables [37,250 – 32,750 (i)]
9,650
Receivables (ii)
Bank charges [9,240 – 2,500 (iii)
9,000
c/d
2,864,040
4,500
35,000
6,740
2,817,800
2,864,040
Part (b)
Bank Reconciliation Statement
For the month February 2017
Particulars
Ref.
Balance as per cash book (adjusted)
Un-presented
869,200 given + [37,250 – 32,750 (i)] – 9,650 outdated (i)
Dr. (Rs)
2,817,800
Cr. (Rs)
864,050
Un-cleared
456,350 given – 35,000 reversal of post-dated cheque (ii)
421,350
Error by bank / Bank charges (iii)
2,500
Balance as per bank statement
Total
3,681,850
ANSWER
3,258,000
3,681,850
11
SANDFORD
Bank Reconciliation Statement (As at xx-xx-xxx)
Particulars
Ref
Dr. (Rs ‘000)
Balance as per cash book W1
750
Un-presented cheques
4,700
Un-credited cheques
Balance as per bank statement β
2,750
Total
8,200
Latest update: April 2020
Cr. (Rs ‘000)
8,200
8,200
CAF 1 – Bank Reconciliation Statement
b/d
W1 - SANDFORD Cash Book (Bank column)
1,600
Bank charges
Direct debit
Dishonored cheque
c/d
1,600
150
400
300
750
1,600
Page | 19
ANSWER
12
Part (a)
Possible causes of disagreements between the bank balance shown in the bank statement
and the bank book balance include:
(i)
Uncredited lodgement / Cheque deposited but not cleared
(ii)
Unpresented cheques
(iii)
Bank charges/interest
(iv)
Posting errors
(v)
Casting errors
(vi)
Direct credit
(vii)
E-payment
(viii) Automated teller machine (ATM) withdrawal
(ix)
Standing order
(x)
Credit/Debit transfer
(xi)
Dishonoured cheques
Part (b)
Adjusted Bank book as at 31 December 2014
Bank Book
b/d
34,000
e-payment charges
Overcast – bank book
Undercast- bank book
Wrong posting (65,000 x 2)
e-payment to supplier
Cheque entered twice
Wrong posting of dividend
c/d
1,092,000
Subscription fees
1,126,000
Bank Reconciliation Statement as at 31 December 2014
Particulars
Dr. Rs.
Balance as per cash book
Un-credited cheques
Bank error (interest on bank deposit not yet posted by bank)
Bank error (over-posting of cheque drawn) 300,000 – 30,000
Unpresented cheques
325,000
Balance as per bank statement (overdrawn)
1,712,000
TOTAL
2,037,000
© kashifadeel.com
35,000
90,000
42,000
130,000
720,000
80,000
9,000
20,000
1,126,000
Cr. Rs.
1,092,000
630,000
45,000
270,000
2,037,000
CAF 1 – Bank Reconciliation Statement
ANSWER
Page | 20
13
Bank Book (Bank column of Cash Book)
b/d
441,500
Error in op balance 133,500 x 2
X10 Chq 352,000 – 325,000
27,000
Standing order
Direct transfer
38,000
Dishonored cheque
Bank charges
c/d (Corrected Balance)
506,500
Bank Reconciliation Statement
As on February 2018
Particulars
Ref.
Balance as per cash book (Corrected)
Un-presented Cheques
X06
X11
Un-cleared items
25 Feb
26 Feb
Error by bank
Balance as per bank statement
Total
Dr. (Rs)
20,000
150,000
622,000
0
792,000
ANSWER
267,000
15,000
200,000
4,500
20,000
506,500
Cr. (Rs)
182,000
294,000
0
316,000
792,000
14
Part (a) Lamda Establishment
Description
Donation expense
A/c payables
Balance c/d
Bank in cash book
Rupees
Description
10,000
Balance b/d
150,000
A/c payables (391,000 – 319,000)
A/c receivables
3,945,000
Interest charges
4,105,000
Rupees
3,928,000
72,000
25,000
80,000
4,105,000
Part (b) Bank balance as per the bank statement
Bank Reconciliation Statement
as at 30 June 2019
Balance as per cash book
Unpresented cheques
1,250,000 – 10,000 time barred – 150,000 cheque issued later
Uncleared cheques
670,000 – 25,000 post dated
Balance as per the bank statement - Overdraft
Latest update: April 2020
Debit
Rupees
Credit
Rupees
3,945,000
1,090,000
645,000
3,500,000
4,590,000
4,590,000
CAF 1 – Bank Reconciliation Statement
ICAP OBJECTIVE BASED QUESTIONS
01.
The following bank reconciliation statement has been prepared by a business.
Bank reconciliation statement as at April 30, 2018
Rs.
Balance as per bank statement (Cr)
45,200
Add: Outstanding cheques
11,500
Less: Uncleared lodgements
13,100
Balance as per cash book (Dr)
43,600
Assuming that all items other than balance as per cash book is correct; what is the correct
balance as per cash book?
(a)
Rs.43,600 Dr as per statement in question
(b)
Rs.43,600 Cr
(c)
Rs.46,800 Dr
(d)
Rs.46,800 Cr
02.
Debit balance of Rs.5,000 as per bank statement means:
(a)
Rs.5,000 payable to business by the bank
(b)
Rs.5,000 receivable from business by the bank
(c)
Rs.5,000 deposited by the business during the month
(d)
Rs.5,000 withdrawn from the bank by business during the year
03.
The following bank reconciliation statement has been prepared by a trainee accountant:
Rs.
Overdraft as per bank statement
6,980
Less: Outstanding cheques
10,460
3,480
Add: Deposits credited after date
11,800
Cash at bank as per cash book
15,280
What should be the correct balance as per cash book?
(a)
Rs.15,280 balance at bank as stated
(b)
Rs.5,640 balance at bank
(c)
Rs.15,280 overdrawn
(d)
Rs.5,640 overdrawn
04.
At the end of 31 March 2019, balance as per cash book of Imtiaz is Rs.10,200 (Dr) which did
not agree with the balance as per the bank statement. On investigation following information
was identified;




A standing order of Rs.350 was paid by the bank did not appear in the cash book.
Dividend received directly in the bank was Rs.30
Bank credited interest for the quarter Rs.350; it was included in cash book as Rs.530
A customer cheque deposited in the bank Rs.120 was dishonoured
What is the corrected balance as per cash book?
(a)
Rs.10,170 Dr
(b)
Rs.10,170 Cr
(c)
9,580 Dr
(d)
9,580 Cr
© kashifadeel.com
Page | 21
CAF 1 – Bank Reconciliation Statement
05.
Page | 22
A business identified that there is a difference between balance of cash book and the
balance as per bank statement at end of 28 February 2019. On investigation it was revealed
that:
 Bank debits account of business for bank charges Rs.30 and standing order Rs.150.
 Bank erroneously debits bank account of business for a cheque of Rs.40.
 Business has credited the bank account for quarterly interest income Rs.150.
What is the total amount of adjustment to be made in cash book of business?
(a)
Rs.180 Cr and Rs.150 Dr
(b)
Rs.180 Cr and Rs.300 Dr
(c)
Rs.220 Cr and Rs.300 Dr
(d)
Rs.220 Dr and Rs.300 Cr
06.
Balance of bank account as per cash book is Rs.35,000 (Dr) while balance as per bank
statement is Rs.32,500 (Cr). Difference is explained as Uncleared lodgments of Rs.2,500 not
included in the bank statement.
What is the amount of bank balance to be reported in Statement of financial Position?
(a)
Rs.35,000 Cash at bank
(b)
Rs.35,000 Overdraft
(c)
Rs.32,500 Cash at bank
(d)
Rs.32,500 Overdraft
07.
A business is in process of reconciling its cash book with banks statement.
Which of the following item require entry in cash book?
(a)
Bank service charges
(b)
Deposits credited by the bank after the date of the bank statement
(c)
Cheque of another account erroneously credited by bank
(d)
Cheques presented by suppliers after the date of bank statement
08.
A business is in process of preparing its bank reconciliation statement. The balance of cash
book did not agree with the balance in bank statement. The following information is available:
 Balance as per cash book before comparing bank statement Rs. 11,000 (Dr)
 Outstanding Cheques Rs.1,550
 Outstanding lodgments Rs.1,200
 Bank charges Rs.50
 Bank interest income Rs.100
What is the balance as per bank statement?
(a)
Rs.11,200 Dr
(b)
Rs.11,400 Dr
(c)
Rs.11,400 Cr
(d)
Rs.11,200 Cr
09.
A business received a bank statement showing a credit balance of Rs.7,400. On
investigation its accountant discovered that the bank statement does not show cheques
received from customers Rs.16,200 and banked and same for cheque payments to suppliers
Rs.18,500. The bank statement also shows bank charges of Rs.250 which has not yet been
recorded in ledger.
What is the current balance as per cash book?
(a)
Rs.5,350 Cr
(b)
Rs.5,350 Dr
(c)
Rs.5,100 Dr
(d)
Rs.5,100 Cr
Latest update: April 2020
CAF 1 – Bank Reconciliation Statement
10.
Following information has been collected from the books of Murtaza as at 31 January 2019:
Balance as per cash book Rs.15,000 (Dr)
On scrutiny of bank statement it was found:

Unpresented Cheques Rs.2,500

Uncredited lodgements Rs.1,500

Bank charges Rs.200

Bank debits Muratza for bank interest Rs.120 instead of Rs.150. No amount was
recorded in cash book of Murtaza
Further it was found that:

Receipt of Rs.1,500 was recorded on credit side of cash book

Payment of Rs.1,200 was recorded on debit side of cash book
11.
What is the corrected cash book balance of Murtaza?
(a)
Rs.15,370 Dr
(b)
Rs.15,250 Dr
(c)
Rs.15,250 Cr
(d)
Rs.15,370 Cr
A bank statement shows a balance of Rs.4,000 in credit. On examining the bank statement,
it was found that the cheques of Rs.600 deposited in bank as per the cash book not yet on
the bank statement and cheques of Rs.1,000 issued out but not yet appeared on the bank
statement.
Furthermore, the cash book shows deposit interest received of Rs.100 but this is not yet on
the statement.
What is the balance as per cash book?
(a)
Rs.3,700
(b)
Rs.4,500
(c)
Rs.5,000
(d)
Rs.3,900
12.
If it was found that the receipt side of the cash book has been under-casted, then in
preparing bank reconciliation statement, it should be:
(a)
Deducted from balance as per cash book
(b)
Added in balance as per bank statement
(c)
Added in balance as per cash book
(d)
Deducted from balance as per bank statement
13.
Which of the following statements is correct?
(a)
Credit balance as per bank statement means a bank overdraft
(b)
Debit balance as per bank statement means a bank overdraft
(c)
Debit balance as per cash book means a bank overdraft
(d)
Credit balance as per cash book means an asset
14.
Which of the following require deduction from cash book balance while preparing bank
reconciliation statement?
(a)
Direct deposit by a customer into bank but entered in cash book
(b)
Standing orders paid by the bank not yet entered in cash book
(c)
Unpresented cheques not yet paid by bank
(d)
Bank debits interest Rs. 2,500 instead of Rs. 5,200
© kashifadeel.com
Page | 23
CAF 1 – Bank Reconciliation Statement
15.
Page | 24
The following information relates to bank reconciliation:
(i)
The bank balance in the cash book before taking the items below into account was
Rs.9,870 overdrawn
(ii)
Bank charges of Rs.750 on the bank statement have not been entered in the cash
book
(iii)
The bank has credited the account in error with Rs.645 which belongs to another
customer
(iv)
Cheque payments totaling Rs.4,385 have been entered in the cash book but have
not been presented by payment
(v)
Cheques totaling Rs.6,500 have been correctly entered on the debit side of the cash
book but have not been paid in at the bank
What was the balance as shown by the bank statement?
(a)
Rs.10,970 overdrawn
(b)
Rs.12,200 overdrawn
(c)
Rs.12,090 overdrawn
(d)
Rs.11,550 overdrawn
16.
Balance as per bank statement of Asim was Rs.11,600 credit as on April 30, 2018 which was
not in agreement with the balance as per cash book.
On investigation the following items were detected:

Cheques issued and paid by the bank for Rs.5,500 but recorded in the cash book as
Rs.500

Bank service charges not entered in the cash book Rs.420

Outstanding lodgements Rs.1,300

Bank has erroneously debited a cheque of Rs.900 to Asim actually the cheque was
issued by Asif.

Unpresented cheques Rs.1,200
What should be the balance as per cash book before adjustments?
Rs. ___________
17.
Following information is available regarding cash at bank of a business:

Cash at bank as per bank column of the cash book Rs.4,910

Unpresented cheques Rs.630

Cheques received & paid into the bank, but not yet entered on the bank statement
Rs.460

Credit transfers entered on the bank statement but not entered in the cash book
Rs.340
What is Cash at bank as per bank statement?
Rs. ___________
18.
The bank column of a cash book showed a credit balance of Rs.8,000. There were
unpresented cheques amounting to Rs.2,500. The bank statement showed bank charges,
Rs.900, which were not recorded in the cash book.
What is the balance on the bank statement?
Rs. ___________
19.
When preparing a bank reconciliation statement the following information is available.

Balance as per cash book Rs.25,000 (Dr)

Outstanding cheques Rs.1,500

uncleared lodgements 1,300

Standing order shown on the bank statement (not appearing in a cash book) Rs.200

Dividend directly deposited in the bank (not appearing in the cash book) Rs.25
What is the balance as per bank statement?
Rs. ___________
Latest update: April 2020
CAF 1 – Bank Reconciliation Statement
20.
Balance as per bank statement was Rs.1,000 in debit. Comparison of bank statement with
cash book revealed that cheques of Rs.3,200 paid in per the cash book but not yet on the
bank statement and cheques of Rs.500 paid out but not yet appeared on the bank statement.
In addition the bank statement shows direct deposit of Rs.800 by a customer but it is not
recorded in cash book.
What is the balance as per cash book after adjustments?
Rs. ___________
21.
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
22.
Bank Reconciliation Statement is prepared by
(a)
Bank
(b)
Accountant
(c)
Customer
(d)
Auditors
23.
Bank reconciliation statement is
(a)
Part of bank statement
(b)
Part of the cash book
(c)
A separate statement
(d)
A sub-division of journal
24.
Favorable balance means?
(a)
Credit balance in the cash book
(b)
Credit balance in Bank statement
(c)
Debit balance in cash book
(d)
Both b and c
25.
Unfavorable balance means?
(a)
Credit balance in the cash book
(b)
Credit balance in Bank statement
(c)
Debit balance in cash book
(d)
Debit balance in petty cash book
26.
When cheque is not paid by the bank, it is called?
(a)
Stale cheque
(b)
Dishonored cheque
(c)
Bearer cheque
(d)
None of the above
27.
Which of the following would not affect bank reconciliation?
(a)
Dishonored cheque
(b)
Bank interest
(c)
Discount received
(d)
Unpresented cheque
28.
An amount of Rs. 1,000 is debited twice in the bank statement. When overdraft as per the
cash book is the starting point?
(a)
Rs. 1,000 will be added
(b)
Rs. 1,000 will be deducted
(c)
Rs. 2,000 will be deducted
(d)
Rs. 2,000 will be added
© kashifadeel.com
Page | 25
CAF 1 – Bank Reconciliation Statement
29.
Bank sent debit advice of Rs. 50,000 to company being interest on overdraft. It was not
entered in cash book.
Identify the correct adjustment in cash book?
(a)
Rs. 50,000 will be debited
(b)
Rs. 50,000 will be credited
(c)
No adjustment
(d)
Rs. 100,000 will be subtracted
30.
A discount of Rs. 20,000 was given to a customer on his prompt repayment of debt but the
cashier entered the gross amount in cash book.
Page | 26
What should be the adjustment in cash to work out the correct balance of cash book?
(a)
Rs. 20,000 will be debited in cash book
(b)
Rs. 20,000 will be credited in cash book
(c)
Rs. 40,000 will be debited in cash book
(d)
Rs. 40,000 will be credited in the cash book
31.
In the Bank reconciliation statement “Deposit in transit” is usually:
(a)
Subtracted from bank statement balance
(b)
Added to bank statement balance
(c)
Added to Cash book balance
(d)
Subtracted from cash book balance
32.
Interest credited to bank account
(a)
Add to cash book balance
(b)
Deduct from cash book balance
(c)
Add to bank statement balance
(d)
Deduct from bank statement balance
33.
Bank inadvertently charged your bank account for another company's bank fees
(a)
Add to cash book balance
(b)
Deduct from cash book balance
(c)
Add to bank statement balance
(d)
Deduct from bank statement balance
34.
A company had a receipt of Rs.989,000 and correctly prepared its bank deposit slip for
Rs.989,000. However, the company recorded the receipt in its Cash account as Rs.998,000.
How is the difference of Rs.9,000 handled on the bank reconciliation?
(a)
Add to cash book balance
(b)
Deduct from cash book balance
(c)
Add to bank statement balance
(d)
Deduct from bank statement balance
Latest update: April 2020
CAF 1 – Bank Reconciliation Statement
OBJECTIVE BASED ANSWERS
01.
(c)
02.
(b)
03.
(d)
04.
05.
(c)
(b)
06.
(a)
07.
08.
(a)
(c)
Uncleared lodgments are added and outstanding cheques are deducted from
balance as per bank statement.
Rs. 45,200 – 11,500 + 13,100 = Rs. 46,800 (Normal debit balance)
Dr balance as per bank statement means credit balance as per cash book i.e. a
liability of business and asset of bank.
The balance in bank statement should be taken as negative.
= – Rs. 6,980 – 10,460+11,800= – Rs. 5,640 overdraft (negative balance)
= Rs. 10,200 – 350+30 [– 530+350] – 120= Rs. 9,580 debit
Rs. 180 Cr (bank charges and standing order payment) and Rs. 300 Dr (150 x
2) the interest should have been debited (not credited) in cash book
Uncleared lodgments are reconciling item cash book balance is not adjusted for
those. Balance to be reported in the statement of financial position is balance
as per cash book.
All other items belong to reconciliation statement
Balance as per cash book adj.
Uncredited lodgment
Unpresented cheques
Balance as per bank statement
Dr
Rs.
11,050
1,550
12,600
Particulars
As per question
Interest income
09.
Cr.
Rs.
1,200
11,400
12,600
Cash book
Rs.
Particulars
11,000
Bank charges
100
c/d
Rs.
50
11,050
11,100
11,100
(b)
Dr
Rs.
Balance as per bank statement
Uncredited lodgment
Unpresented cheques
Balance as per cash book adjusted
Particulars
Unadjusted bal β
18,500
5,100
23,600
Cash book
Rs.
Particulars
5,350
Bank charges
c/d
5,350
© kashifadeel.com
Cr.
Rs.
7,400
16,200
23,600
Rs.
250
5,100
5,350
Page | 27
CAF 1 – Bank Reconciliation Statement
10.
(b)
Cash book
Particulars
As per question
Wrongly recorded
1,500x2
Page | 28
Rs.
15,000
3,000
Particulars
Bank interest
Payment wrongly
recorded 1,200 x 2
Bank charges
c/d
18,000
11.
200
15,250
18,000
(a)
Dr Rs.
Balance as per bank statement
Outstanding lodgment
Interest not appearing in bank statement
Unpresented cheques
Cash book balance after adjustments
12.
(c)
13.
(b)
14.
(b)
15.
(c)
100
1,000
3,700
4,600
Cr. Rs.
4,000
600
4,600
Errors in cash book are adjusted to the balance as per cash book and
undercasting of error would have decreased balance of cash that needs to be
increased now.
Debit balance as per bank statement means business is a debtor of bank,
hence, bank overdraft.
Standing order and bank charges both are payments and would be deducted
from cash book balance.
Dr Rs.
Balance as per cash book adj.
Uncredited lodgment
Outstanding cheques
Bank error
Balance as per bank statement
4,385
645
12,090
17,120
Cash book
Rs.
Particulars
b/d as per question
10,620
Bank charges
10,620
Particulars
c/d
16.
Rs.
150
2,400
Cr. Rs.
10,620
6,500
17,120
Rs.
9,870
750
10,620
Rs. 18,020
Dr Rs.
Balance as per bank statement
Outstanding lodgment
Cheque erroneously debited
Unpresented cheques
Cash book balance after adjustments
Particulars
Unadjusted bal β
1,200
12,600
13,800
Cash book
Rs.
Particulars
18,020
Error in cheque
Bank charges
c/d
18,020
Latest update: April 2020
Cr. Rs.
11,600
1,300
900
13,800
Rs.
5,000
420
12,600
18,020
CAF 1 – Bank Reconciliation Statement
17.
Rs. 5,420
Balance as per cash book adj.
Uncredited lodgment
Unpresented cheques
Balance as per bank statement
Dr
Rs.
5,250
460
630
5,880
Particulars
As per question
Credit transfer
18.
5,250
5,250
5,250
Rs.
Rs. 6,400
Balance as per cash book adj.
Unpresented cheques
Balance as per bank statement
Particulars
c/d
2,500
6,400
8,900
8,900
Rs.
8,000
900
8,900
8,900
Rs. 25,025
Dr
Rs.
24,825
Particulars
As per question
Dividend
Cr.
Rs.
1,300
1,500
26,325
25,025
26,325
Cash book
Rs.
Particulars
25,000
Standing order
25
c/d
Rs.
200
24,820
25,025
25,025
Rs. 1,700
Dr
Balance as per bank statement
Uncredited lodgment
Unpresented cheques
Balance as per cash book adjusted
21.
22.
23.
Cr.
Rs.
8,900
Cash book
Rs.
Particulars
b/d as per question
8,900
Bank charges
Balance as per cash book adj.
Uncredited lodgment
Outstanding cheques
Balance as per bank statement
20.
5,420
5,880
Cash book
Rs.
Particulars
4,910
340
c/d
Dr
Rs.
19.
Cr.
Rs.
(d)
(b)
(c)
© kashifadeel.com
Dr
Rs.
1,000
Cr.
Rs.
3,200
500
1,700
3,200
3,200
Page | 29
CAF 1 – Bank Reconciliation Statement
Page | 30
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
(d)
(a)
(b)
(c)
(a)
(b)
(b)
(b)
(a)
(c)
(b)
Latest update: April 2020