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Class 11 Bank Reconciliation Statement: cheat sheet
CBSE Accountancy. Why the cash book and the pass book show different bank balances, how each cause moves them, and the reconciliation statement from either book, overdrafts included.
Key ideas
- A favourable bank balance is a debit balance in the cash book and a credit balance in the pass book; an overdraft is the reverse.
- Differences come from timing (cheques not yet presented or not yet credited) and from items the bank records first (charges, interest, direct deposits, standing instructions, dishonoured cheques).
- For each item ask one question: does it make the pass book show more or less than the cash book?
- Starting from the cash book balance, add what makes the pass book more: cheques issued but not presented, interest credited, direct deposits, dividends and bills collected by the bank.
- Starting from the cash book balance, subtract what makes the pass book less: cheques deposited but not credited, bank charges and commission, interest on a loan, standing-instruction payments, dishonoured cheques.
- Starting from the pass book, every sign is reversed; for an overdraft the signs are reversed again.
- Items known only to the bank can first be entered in the cash book to get the corrected balance, leaving only the timing items for the statement.
Remember
| From the cash book (favourable) | pass book = cash book + cheques not presented + direct credits − cheques not credited − direct debits |
| From the pass book (favourable) | cash book = pass book − cheques not presented − direct credits + cheques not credited + direct debits |
| Corrected cash book balance | cash book + interest and direct credits − bank charges and direct debits |
| Then | pass book = corrected cash book + cheques not presented − cheques not credited |
| Overdraft | the same items with the opposite signs |
| A debit balance in the pass book | an overdraft |
Watch out
- Adding cheques deposited but not yet credited: they are subtracted from the cash book balance.
- Forgetting to reverse the signs for an overdraft.
- Reading a credit balance in the pass book as an overdraft.
Worked example
Cash book balance (debit): ₹43,000. (1) Cheques issued to creditors and not yet cashed by them: ₹18,000; (2) A cheque deposited was dishonoured, not entered in the cash book: ₹9,000; (3) Rent received directly into the bank account: ₹9,000. Find the pass book balance.
Working: Balance as per the cash book (debit balance): ₹43,000 Add: cheques issued to creditors and not yet cashed by them ₹18,000; rent received directly into the bank account ₹9,000 (total ₹27,000) Less: a cheque deposited was dishonoured, not entered in the cash book ₹9,000 (total ₹9,000) Balance as per the pass book (credit balance): ₹61,000
Answer: ₹61,000
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