Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement

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Tamilnadu Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement

Samacheer Kalvi 11th Accountancy Bank Reconciliation Statement Text Book Back Questions and Answers

I. Multiple Choice Questions
Choose the Correct Answer

Question 1.
A bank reconciliation statement is prepared by ………………
(a) Bank
(b) Business
(c) Debtor to the business
(d) Creditor to the business
Answer:
(b) Business

Question 2.
A bank reconciliation statement is prepared with the help of ………………
(a) Bank statement
(b) Cash book
(c) Bank statement and bank column of the cash book
(d) Petty cash book
Answer:
(c) Bank statement and bank column of the cash book

Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement

Question 3.
Debit balance in the bank column of the cash book means ………………
(a) Credit balance as per bank statement
(b) Debit balance as per bank statement
(c) Overdraft as per cash book
(d) None of the above
Answer:
(a) Credit balance as per bank statement

Question 4.
A bank statement is a copy of ………………
(a) Cash column of the cash book
(b) Bank column of the cash book
(c) A customer’s account in the bank’s book
(d) Cheques issued by the business
Answer:
(c) A customer’s account in the bank’s book

Question 5.
A bank reconciliation statement is prepared to know the causes for the difference between:
(a) The balance as per the cash column of the cash book and bank column of the cash book
(b) The balance as per the cash column of the cash book and bank statement
(c) The balance as per the bank column of the cash book and the bank statement
(d) The balance as per petty cash book and the cash book
Answer:
(c) The balance as per the bank column of the cash book and the bank statement

Question 6.
When money is withdrawn from bank, the bank ………………
(a) Credits customer’s account
(b) Debits customer’s account
(c) Debits and credits customer’s account
(d) None of these
Answer:
(b) Debits customer’s account

Question 7.
Which of the following is not the salient feature of bank reconciliation statement?
(a) Any undue delay in the clearance of cheques will be shown up by the reconciliation
(b) Reconciliation statement will discourage the accountant of the bank from embezzlement
(c) It helps in finding the actual position of the bank balance
(d) Reconciliation statement is prepared only at the end of the accounting period
Answer:
(d) Reconciliation statement is prepared only at the end of the accounting period

Question 8.
Balance as per cash book is ₹ 2,000. Bank charge of ₹ 50 debited by the bank is not yet shown in the cash book. What is the bank statement balance now?
(a) ₹ 1,950 credit balance
(a) ₹ 1,950 credit balance
(b) ₹ 1,950 debit balance
(c) ₹ 2,050 debit balance
(d) ₹ 2,050 credit balance
Answer:
(a) ₹ 1,950 credit balance

Question 9.
Balance as per bank statement is ₹ 1,000. Cheque deposited, but not yet credited by the bank is ₹ 2, 000. What is the balance as per bank column of the cash book?
(a) ₹ 3,000 overdraft
(b) ₹ 3,000 favourable
(c) ₹ 1,000 overdraft
(d) ₹ 1,000 favourable
Answer:
(b) ₹ 3,000 favourable

Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement

Question 10.
Which one of the following is not a timing difference?
(a) Cheque deposited but not yet credited
(b) Cheque issued but not yet presented for payment
(c) Amount directly paid into the bank
(d) Wrong debit in the cash book
Answer:
(d) Wrong debit in the cash book

II. Very Short Answer Questions

Question 1.
What is meant by bank overdraft?
Answer:
An amount of money that a customer with a bank account is temporarily allowed to owe to the bank. An overdraft occurs when money is withdrawn from a bank account and the available balance goes below zero.

Question 2.
What is a bank reconciliation statement?
Answer:
If every entry in the cash book matches with the bank statement, then the bank balance will be the same in both records. But, practically it may not be possible. When the balances do not agree with each other, the need for preparing a statement to explain the causes arises. This statement is called a bank reconciliation statement (BRS).

Question 3.
State any two causes of disagreement between the balance as per bank column of cash book and bank statement.
Answer:

  1. Cheques issued but not presented for payment.
  2. Cheques paid into the bank for collection but not yet collected.

Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement

Question 4.
Give any two expenses which may be paid by the banker as per standing instruction.
Answer:
Insurance premium, loan installment, etc., paid as per standing instructions.

Question 5.
Substitute the following statements with one word/phrase.
Answer:

  1. A copy of the customer’s account issued by the bank – PASSBOOK
  2. Debit balance as per bank statement – BANK OVERDRAFT
  3. Statement showing the causes of disagreement between the balance as per cash book and balance as per bank statement – BANK RECONCILIATION STATEMENT

Question 6.
Do you agree with the following statements? Write “yes” if you agree, and write “no” if you disagree.

  1. The bank reconciliation statement is prepared by the banker.
  2. Adjusting the cash book before preparing the bank reconciliation statement is compulsory.
  3. The credit balance as per the bank statement is an overdraft.
  4. Bank charges debited by the bank increase the balance as per the bank statement.
  5. A bank reconciliation statement is prepared to identify the causes of differences between balance as per the bank column of the cash book and balance as per cash column of the cash book.

Answer:

  1. No
  2. No
  3. No
  4. No
  5. Yes

III. Short Answer Questions

Question 1.
Give any three reasons for preparing a bank reconciliation statement.
Answer:
The main reasons for preparing a bank reconciliation statement are:

  1. To identify the reasons for the difference between the bank balance as per the cash book and bank balance as per bank statement.
  2. To identify the delay in the clearance of cheques.
  3. To ascertain the correct balance of the bank column of the cash book.

Question 2.
What is meant by the term “cheque not yet presented?”
Answer:
When the cheques are issued by the business, it is immediately entered on the credit side of the cash book by the business. But, this may not be entered in the bank statement on the same day. It will be entered in the bank statement only after it is presented with the bank.

Question 3.
Explain why does money deposited into the bank appears on the debit side of the cash book, but on the credit side of the bank statement?
Answer:

  1. The assets will be entered on the debit side. The balance of deposits held by the bank is recorded.
  2. It denotes a favourable balance as per cash boor unfavourable balance as per the passbook.
    On the debit side, receipts of cash and cheques are recorded.
  3. Deposited cash into the bank decreases the amount of cash available and is, therefore, credited to the cash account (cash column of the cash book).
  4. But, it also increases the bank balance and is, therefore, debited to a bank account (bank column of the cash book).

Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement

Question 4.
What will be the effect of interest charged by the bank, if the balance is an overdraft?
Answer:
The bank has to cover the cost of running the customer’s account. So debit is given to the account of the business towards bank charges. Also, if the business had taken any loan or overdrawn, interest has to be paid by the business. These entries for bank charges and interest are made in the bank statement. But, the entry is made in the cash book only when the bank statement is received by the business. Till then, the Cash book shows more balance than bank statements.

Question 5.
State the timing differences in BRS with examples.
Answer:
Cheques issued but not presented for payment:
When the cheques are issued by the business, it is immediately entered on the credit side of the cash book by the business. But, this may not be entered in the bank statement on the same day.

lt will be entered in the bank statement only after it is presented with, For example, the balances as per cash book and bank statement are ₹ 20,000 for X & Co. X & Co. issued a cheque in favour of Y & Co for ₹ 10,000, on 27th March 2017. So, X & Co’s cash book is credited with ₹ 10,000 on 27th March 2017. But, the cheque is presented to the bank on 2nd April 2017.

In case, the bank sends a statement to X & Co, upto 31st March 2017, it will not contain this transaction. As a result, there will be a difference of 10,000, between the balance shown as per cash book and the balance as per bank statement.

Cheques deposited into the bank but not yet credited:
When the cheques are deposited into the bank, the amount is debited in the cash book on the same day. But, these may not be shown in the bank passbook on the same day because these will be entered in the bank statement only after the collection of the cheques.

For example, the balances as per cash book and bank statement are ₹ 20,000 for X & Co. X & Co. receives a cheque on 25th March 2016, from ABC Limited for ₹ 5,000. On the same day, X & Co debits its cash book with ₹ 5,000.

But the bank credits X & Co’s account only when the cheque is collected from ABC Limited’s bank. This shows that is a time gap between depositing the cheque by the customer (X & Co) and the collection of cheque by the bank.

Bank Charges and interest on loan and overdraft charged by the bank:
The bank has to cover the cost of running the customer’s account. So debit is given to the account of the business towards bank charges.

Also, if the business had taken any loan or overdrawn, interest has to be paid by the business. These entries for bank charges and interest are made in the bank statement. But, the entry is made in the cash book only when the bank statement is received by the business.

Till then, the cash book shows more balance than a bank statement. For example, the opening balance as per the cash book and the bank statement as of 1st March 2017 is ₹ 7,000. Bank debits for bank charges ₹ 300 as of 27th March 2017. But there is no entry for the same in the cash book as on such date.

IV. Exercises

Question 1.
From the following particulars prepare a bank reconciliation statement of Jayakumar as of 31st December 2016. (3 Marks)
(a) Balance as per cash book ₹ 7,130
(b) Cheque deposited but not cleared ₹ 1,000
(c) A customer has deposited ₹ 800 into the bank directly
Answer:
Bank reconciliation statement of Jayakumar as on 31st December, 2016
Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement

Question 2.
From the following particulars of Kamakshi traders, prepare a bank reconciliation statement as on 31st March, 2018. (3 Marks)
(a) Debit balance as per cash book ₹ 10,500
(b) Cheque deposited into bank amounting to ₹ 5,500 credited by bank, but entered twice in the cash book
(c) Cheques issued and presented for payment amounting to ₹ 7,000 omitted in the cash book
(d) Cheque book charges debited by the bank ₹ 200 not recorded in the cash book.
(e) Cash of ₹ 1,000 deposited by a customer of the business in cash deposit machine not recorded in the cash book.
Answer:
Bank reconciliation statement of Kamakshi as on 31st March, 2018
Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement

Question 3.
From the following information, prepare bank reconciliation statement to find out the bank statement balance as on 31st December, 2017. (5 Marks)
Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement
Answer:
Bank reconciliation statement as on 31st December, 2017
Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement

Question 4.
On 31st March, 2017, Anand’s cash book showed a balance of ₹ 1,12,500. Prepare bank reconciliation statement. (5 Marks)
(a) He had issued cheques amounting to ₹ 23,000 on 28.3.2017, of which cheques amounting to ₹ 9,000 have so far been presented for payment.
(b) A cheque for ₹ 6,300 deposited into bank on 27.3.2017, but the bank credited the same only on 5th April 2017.
(c) He had also received a cheque for ₹ 12,000 which, although entered by him in the cash book, was not deposited in the bank.
(d) Wrong credit given by the bank on 30th March 2017 for ₹ 2,000.
(e) On 30th March 2017, a bill already discounted with the bank for ₹ 3,000 was dishonoured, but no entry was made in the cash book.
(f) Interest on debentures of ₹ 700 was received by the bank directly.
(g) Cash sales of ₹ 4,000 wrongly entered in the bank column of the cash book.
Answer:
Bank reconciliation statement of Anand as on 31st March, 2017
Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement

Question 5.
From the following particulars of Siva and Company, prepare a bank reconciliation statement as on 31st December, 2017. (2 Marks)
(a) Credit balance as per cash book ₹ 12,000.
(b) A cheque of ₹ 1,200 issued and presented for payment to the bank, wrongly credited in the cash book as ₹ 2,100.
(c) Debit side of bank statement was undercast by ₹ 100.
Answer:
Bank reconciliation statement of Siva and Company as on 31st December, 2017
Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement

Question 6.
From the following particulars of Raheem traders, prepare a bank reconciliation statement as on 31st March, 2018. (3 Marks)
(a) Overdraft as per cash book ₹ 2,500
(b) Debit side of cash book was undercast by ₹ 700
(c) Amount received by bank through RTGS amounting to ₹ 2,00,000, omitted in the cash book.
(d) Two cheques issued for ₹ 1,800 and ₹ 2,000 on 29th March 2018. Only the second cheque is presented for payment.
(e) Insurance premium on car for ₹ 1,000 paid by the bank as per standing instruction not recorded in the cash book.
Answer:
Bank reconciliation statement of Raheem as on 31st March, 2018
Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement

Question 7.
From the following information, prepare bank reconciliation statement as on 31st December, 2017 to find out the balance as per bank statement. (5 Marks)
Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement
Answer:
Bank reconciliation statement as on 31st December, 2017
Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement

Question 8.
Prepare bank reconciliation statement from the following data. (5 Marks)
Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement
Answer:
Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement

Question 9.
From the following particulars of Veera traders, prepare a bank reconciliation statement as on 31st December 2017. (2 Marks)
(a) Credit balance as per bank statement ₹ 6,000
(b) Amount received by the bank through NEFT for ₹ 3,500, entered twice in the cash book.
(c) Cheque dishonoured amounting to ₹ 2,500, not entered in the cash book.
Answer:
Bank reconciliation statement of Veera Traders as of 31st December 2017
Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement

Question 10.
Prepare bank reconciliation statement from the following data and find out the balance as per cash book as of 31st March 2018. (3 Marks)
Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement
Answer:
Bank reconciliation statement as on 31st March 2018
Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement

Question 11.
Ascertain the cash book balance from the following particulars as of 31st December 2017: (5 Marks)

  1. Credit balance as per bank statement ₹ 2,500
  2. Bank charges of ₹ 60 have not been entered in the cash book
  3. Cheque deposited on 28th December 2017 for ₹ 1,000 was not yet credited by the bank
  4. Cheque issued on 24th December 2017 for ₹ 700, not yet presented for payment
  5. A dividend of ₹ 400 collected by the bank directly but not entered in the cash book
  6. A cheque of ₹ 600 had been dishonoured, but no entry was made in the cash book
  7. Interest on term loan ₹ 1,200 debited by bank but not accounted in cash book
  8. No entry had been made in the cash book for a trade subscription of ₹ 500 paid vide banker’s order on 23rd December 2014

Answer:
Bank reconciliation statement as on 31st December, 2017
Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement

Question 12.
From the following particulars of Raja traders, prepare a bank reconciliation statement as on 31st January, 2018. (5 Marks)
(a) Balance as per bank statement ₹ 5,000
(b) Cheques amounting to ₹ 800 had been recorded in the cash book as having been deposited into the bank on 25th January 2018, but were entered in the bank statement on 2nd February 2018.
(c) Amount received by bank through NEFT amounting to ₹ 3,000, omitted in the cash book.
(d) Two cheques issued for ₹ 3,000 and ₹ 2,000 on 29th March 2018. Only the first cheque is presented for payment.
(e) Insurance premium on motor vehicles for ₹ 1,000 paid by the bank as per standing instruction not recorded in the cash book.
(f) Credit side of cash book was undercast by ₹ 700
(g) Subsidy received directly by the bank from the state government amounting to ₹ 10,000, not entered in cash book.
Answer:
Bank reconciliation statement of Raja Traders as on 31st January, 2018
Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement

Question 13.
From the following particulars of Simon traders, prepare a bank reconciliation statement as on 31st March, 2018. (2 Marks)
(a) Debit balance as per bank statement ₹ 2,500
(b) Cheques deposited amounting to ₹ 10,000, not yet credited by bank.
(c) Payment through net banking for ₹ 2,000, omitted in the cash book
Answer:
Bank reconciliation statement of Simon Traders as on 31st March, 2018
Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement

Question 14.
From the following particulars, ascertain the cash book balance as on 31st December, 2016.

  1. Overdraft balance as per bank statement ₹ 1,26,640 (3 Marks)
  2. Interest on overdraft entered in the bank statement, but not yet recorded in cash book ₹ 3,200
  3. Bank charges entered in bank statement, but not found in cash book ₹ 600
  4. Cheques issued, but not yet presented for payment ₹ 23,360
  5. Cheques deposited into the bank but not yet credited ₹ 43,400
  6. Interest on investment collected by the bank ₹ 24,000

Answer:
Bank reconciliation statement as on 31st December, 2016
Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement

Question 15.
From the following particulars of John traders, prepare a bank reconciliation statement as of 31st March 2018. (5 Marks)
(a) Bank overdraft as per bank statement ₹ 4,000
(b) Cheques amounting to ₹ 2,000 had been recorded in the cash book as having been deposited into the bank on 26th March 2018 but were entered in the bank statement on 4th April 2018.
(c) Amount received by the bank through cash deposit machine amounting to ₹ 5,000, omitted in the cash book.
(d) Amount of ₹ 3,000 wrongly debited to John traders accounts by the bank, for which no details are available.
(e) Bills for collection credited by the bank till 29th March 2017 amounting to ₹ 4,000, but no advice received by John traders.
(f) Electricity charges made through net banking for ₹ 900 were wrongly entered in the cash column of the cash book instead of the bank column.
(g) Cash sales wrongly recorded in the bank column of the cash book for ₹ 4,000.
Answer:
Bank reconciliation statement of John Traders as of 31st March 2018
Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement

Question 16.
Prepare bank reconciliation statement from the following data. (3 Marks)
Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement
Answer:
Bank reconciliation statement
Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement

Question 17.
Prepare bank reconciliation statement as on 31st March, 2017 from the following extracts of cash book and bank statement.
Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement
Bank Statement
Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement
Answer:
Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement

Question 18.
A trader received his bank statement on 31st December, 2017 which showed an overdraft balance of ₹ 12,000. On the same day, his cash book showed a debit balance of ₹ 2,000.
Analyse the following transactions. Choose the possible causes and prepare a bank reconciliation statement to show the causes of differences.
(a) Cheque deposited for ₹ 2,000 on 21st December, 2017. Bank credited the same on 26th December, 2017.
(b) Cheque issued for payment on 26th December, 2017 amounting to ₹ 2,500, not yet presented until 31st, December, 2017.
(c) Bank charges amounting to ₹ 200 not yet entered in the cash book.
(d) Online payment for ₹ 1,500 entered twice in the cash book.
(e) Cheque deposited amounting to ₹ 1,000, but omitted in the cash book. The same cheque was dishonoured by bank, but not yet entered in cash book.
(f) Cheque deposited, not yet credited by bank amounting to ₹ 17,800.
Answer:
Bank reconciliation statement as on 31st December, 2017
Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement
Note: Transactions (a) and (c) have been entered in both cash book and bank statement also. So we need not false into accounts.

Textbook Case Study Solved

Magesh, an enthusiastic young entrepreneur, started a business on 1st  December, 2017. He opened a current account with a nationalised bank for his business transaction. In the same bank, he maintains his personal savings bank account too. He did not find time to maintain his cash book. So he appointed a person called Dinesh to take care of bank transactions. But that person was inexperienced.

Question 1.
On 1st December, 2017, the opening balance as per cash book and bank record was the same. On 2nd December, Magesh issued a cheque for ₹ 2,000 to a supplier, but the same was entered in the credit side of the cash book as ₹ 200.
Answer:
Credit balance as per bank statement is ₹ 19,700.

Question 2.
On 3rd, December, Magesh issued his savings bank account cheque for his personal expenses amounting to ₹ 2,500, but Dinesh assumed this as current account cheque and the same was entered in the cash book as drawings.
Answer:
Over casting of debit side of bank column of the cash book is ₹ 1800.

Question 3.
Dinesh was asked to deposit cash of ₹ 1,000 in cash deposit machine in order to make a payment to one of the business’ supplier. He credited the same in the bank column of the cash book.
Answer:
Wrong debit in cash book is ₹ 2,500.

Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement

Question 4.
On 15th December, one of his customers made online payment to Magesh’s current account, amounting to ₹ 1,000. There was no entry in the cash book for this.
Answer:
Wrong credit in cash book is ₹ 1,000.
Instead of personal bank account he can open business bank account (i.e.) current account.

Question 5.
Dinesh received his salary in cash for ₹ 5,000. He credited this amount in the bank column of cash book.
Answer:
Online payment no recorded in cash book is ₹ 1,000.

Question 6.
Bank made payment on 23rd December, amounting to ₹ 2,500, as per standing instruction. But, there is no entry in the cash book for the same.
Answer:
Wrong credit in the cash book of bank column is ₹ 5,000.

Question 7.
On 31st, December 2017, Magesh received a bank statement from his bank, which showed a credit balance of ₹ 19,700. He instructed Dinesh to check the statement with the cash book. On comparing both, Dinesh found that the cash book showed a balance of ₹ 14,500. He was puzzled. He needs your help to reconcile the balances.
Answer:
Insurance premium paid but not entered in cash book is ₹ 2,500.
Bank reconciliation cash book as on 31st December 2017
Samacheer Kalvi 11th Accountancy Solutions Chapter 8 Bank Reconciliation Statement