Cash book bank balance and passbook balance. It matches the cash book with the bank statement.

Cheque issued but not yet presented causes:

Passbook balance to be higher than cash book. The bank has not yet deducted the amount.

Bank charges debited by bank but not recorded in the cash book cause:

A difference to be adjusted in the cash book. The cash book must be updated.

A credit balance in the bank column of the cash book means:

Overdraft. The account is overdrawn.

Find reasons for differences between two records. It explains the differences.

Maharashtra State Board · HSC Commerce · Class 11 (Std XI)

Class 11 Book Keeping and Accountancy Chapter 6: Bank Reconciliation Statement

Short notes, key concepts, quick revision and practice MCQs with answers

A Bank Reconciliation Statement (BRS) is prepared to reconcile the balance in the cash book (bank column) with the balance in the bank's passbook on a particular date.

Key concepts: Bank Reconciliation Statement

Need: The two balances often differ due to timing differences and errors, so reconciliation avoids confusion and detects mistakes.
Reasons for difference: Cheques issued but not yet presented; cheques deposited but not yet credited; direct deposits, direct payments, bank charges, interest and dishonoured cheques.
Cash book vs passbook: Cash book is the business's record; passbook is the bank's record of the customer's account.
Overdraft: When the bank column shows a credit balance, the account is overdrawn.
Preparation: Start with the cash book (or passbook) balance and adjust for each reconciling item.

Quick revision: important points

Cheques issued but not presented: passbook balance is higher than cash book balance.
Cheques deposited but not yet credited: passbook balance is lower.
BRS is prepared at the end of a period, usually monthly.

Practice MCQs with answers

BRS reconciles:
1. Cash book bank balance and passbook balance
2. Sales and purchases
3. Assets and capital
4. Cash and stock
Show answer
Answer: A. Cash book bank balance and passbook balance
It matches the cash book with the bank statement.
Cheque issued but not yet presented causes:
1. Passbook balance to be higher than cash book
2. Passbook balance to be lower
3. No difference
4. Loss
Show answer
Answer: A. Passbook balance to be higher than cash book
The bank has not yet deducted the amount.
Bank charges debited by bank but not recorded in the cash book cause:
1. A difference to be adjusted in the cash book
2. No change
3. Profit
4. Cash increase
Show answer
Answer: A. A difference to be adjusted in the cash book
The cash book must be updated.
A credit balance in the bank column of the cash book means:
1. Overdraft
2. Surplus
3. Loss
4. Profit
Show answer
Answer: A. Overdraft
The account is overdrawn.
BRS is prepared to:
1. Find reasons for differences between two records
2. Increase profits
3. Print money
4. Increase capital
Show answer
Answer: A. Find reasons for differences between two records
It explains the differences.

All Class 11 Book Keeping and Accountancy chapters

Chapter 1: Introduction to Book-keeping and Accountancy
Chapter 2: Meaning and Fundamentals of Double Entry Book-keeping
Chapter 3: Journal
Chapter 4: Ledger
Chapter 5: Subsidiary Books
Chapter 6: Bank Reconciliation Statement
Chapter 7: Depreciation
Chapter 8: Rectification of Errors
Chapter 9: Final Accounts of a Proprietary Concern
Chapter 10: Single Entry System

Class 11 Book Keeping and Accountancy notes: all chapters