6. Bank Reconciliation Statement: Class 10 Account Notes | Chapter 6

Importantedunotes.com

Class 10 Account (Office Management and Accounting)

Chapter 6: Bank Reconciliation Statement

For SEE Board Exam Preparation: Complete guide with Very Short, Short, and Numerical Exercise solutions

Welcome to the complete guide on the Bank Reconciliation Statement. This chapter is highly essential for Class 10 Account (Office Management and Accounting) students preparing for their SEE board exams.

For official curriculum details regarding the Bank Reconciliation Statement, you can visit the CDC Nepal Official Website.

Looking for more study materials? Explore our full collection of Class 10 Account Notes.

Secondary Education Examination (S.E.E.) Questions Pattern

Types of Question	Marks	Number of Questions	Total
Very Short Answer Question	1	1 (Chapter 6)	1
Short Answer Question (Theory / Numerical)	5	1	5
Total	—	2	6

1. CDC Exercise Solutions
Very Short Answer Questions [1 Mark]

(a) Why is a Bank Reconciliation Statement prepared?

Answer: This statement is prepared to identify the reasons for the difference between the balance in the business’s Bank Cash Book and the balance in the Passbook (Statement) provided by the bank on a specific date, and to reconcile both accounts.

(b) Who prepares the Bank Cash Book?

Answer: The Bank Cash Book is prepared by the Accountant of the relevant office or business.

Answer: The Bank Statement is more prevalent because it can be easily printed from a computer system, viewed at any time through internet or mobile banking, and does not require carrying a passbook to the bank like a passbook does.

(d) In what period is a Bank Reconciliation Statement generally prepared?

Answer: A Bank Reconciliation Statement is generally prepared at the end of each month or at the end of the fiscal year, depending on the need.

(e) Write any three reasons why the Bank Passbook (Bank Statement) and Bank Cash Book differ.

Answer: Three reasons for the difference are: (1) a cheque issued for payment but not yet presented to the bank for encashment, (2) a cheque sent to the bank for deposit but not yet collected by the bank, and (3) a customer directly depositing an amount into the bank account.

(f) What effect does it have on the accounts when the bank has credited interest but it has not been recorded in the Bank Cash Book?

Answer: In such a situation, the balance in the Bank Passbook is higher, but since there is no entry in the Cash Book, the Cash Book balance remains lower.

2. Short Answer Questions (Theory) [5 Marks]

(a) What is Bank Reconciliation? Mention five of its importances. 5 Marks

Meaning of Bank Reconciliation:
The statement prepared to identify the reasons for the discrepancies or differences that appear between the balance in the Cash Column (Bank Column) of the office’s Cash Book and the balance in the Passbook (Statement) provided by the bank on a specific date, and to show both account balances as equal, is called a Bank Reconciliation Statement.

Its Five Importances:

1. To identify the actual reasons why the balances of the two accounts differ.
2. To detect and prevent possible errors and financial fraud by the cash section of the office or bank employees.
3. To ascertain the actual and true balance held by the business at the bank.
4. To obtain information about cheques sent to the bank for deposit but not yet collected.
5. To update the Cash Book by learning about amounts directly deposited into or deducted from the account by the bank.

(b) Mention the reasons why the office and bank accounts differ. 5 Marks

The main reasons for the difference between the office’s Cash Book and the bank’s Passbook are as follows:

Difference due to timing: Cheques issued and given for payment but not yet presented for encashment; cheques sent to the bank for deposit but not yet collected by the bank.
Transactions done directly by the bank: Interest or dividends directly credited by the bank; service charges, loan installments, or loan interest directly debited by the bank, but the office is unaware of this.
Direct deposit by a customer: A customer directly depositing money into the bank account without informing the office.
Errors and mistakes: Errors made by the office accountant or bank staff while writing or adding up amounts.

In the Bank Statement (Passbook), when an amount is deposited it is ‘Credit’ and when it is withdrawn or deducted it is ‘Debit’.

(i) When a customer directly deposits a cheque or cash: Credit side (the amount in the account increases).
(ii) When the bank credits interest: Credit side (the amount in the account increases).
(iii) When the office deposits cash: Credit side (the amount in the account increases).
(iv) When the bank deducts a service charge: Debit side (the amount in the account decreases).

(d) State whether the following transactions Debit or Credit the office’s Cash Account. 5 Marks

In the office’s Cash Book, when an amount is received it is ‘Debit’ and when payment is made it is ‘Credit’.

(i) When the bank mistakenly credits the account: After the office is informed and the adjustment is made, it is on the Debit side.
(ii) When a deposited cheque is dishonoured (returned): It was debited when deposited; after dishonour, it is on the Credit side to reverse the entry.
(iii) When a customer directly deposits a cheque or cash: After receiving the information, it is on the Debit side.
(iv) When the bank deducts a service charge: It is on the Credit side.
(v) When the office deposits cash: It is on the Debit side (in the Bank Column).

(e) Write in point form the situations in which the Bank Passbook and Bank Cash Book differ. 5 Marks

The situations in which the accounts of these two differ are as follows:

1. A cheque was issued to a creditor for payment but that cheque has not been presented to the bank for encashment.
2. A cheque received from a customer was sent to the bank for deposit but the bank has not yet collected it.
3. The bank has directly deducted commission, bank charges, or interest expense from the account.
4. The bank has credited interest on the deposit but it has not been recorded in the Cash Book.
5. A customer has directly deposited money into the bank without informing the office.
6. A cheque deposited at the bank has been dishonoured (bounced) but the office is unaware of this.

3. Numerical Problems [5 Marks]

(a) Bank Reconciliation Statement of Ram Bakery as of Shrawan 23: 5 Marks

Particulars	Amount (Rs.)	Total Amount (Rs.)
Balance as per Cash Book		44,000
Add:
(ii) Interest credited by bank but not recorded in Cash Book	500
(iii) Amount directly deposited into bank account by customer Jujuman	7,000
(iv) Cheque issued to supplier but not yet presented to bank for encashment	19,000	26,500
		70,500
Less:
(v) Cheque issued to Dhanman but omitted from Cash Book (Passbook already reduced)	5,000	(5,000)
Balance as per Passbook		65,500

(b) Bank Reconciliation Statement of Dolkha Khaja Ghar as of Ashoj 13: 5 Marks

Particulars	Amount (Rs.)	Total Amount (Rs.)
Balance as per Cash Book		37,000
Add:
(ii) Amount mistakenly credited (deposited) by Nepal Bank	18,000
(iii) Dividends and other income directly collected by bank	3,500	21,500
		58,500
Less:
(iv) Bank charges and commission deducted by bank	1,200
(v) Cheque deposited at bank dishonoured (returned)	12,000	(13,200)
Balance as per Passbook		45,300

Particulars	Amount (Rs.)	Total Amount (Rs.)
Balance as per Cash Book		86,000
Add:
(iii) Amount directly deposited into bank by debtor Ronish	44,000
(v) Interest received omitted from Cash Book	5,000	49,000
		1,35,000
Less:
(ii) Loan interest directly deducted from account by bank	18,000
(iv) Cheque sent for deposit dishonoured (returned) by bank	9,000	(27,000)
Balance as per Passbook		1,08,000

(d) Bank Reconciliation Statement of Narayan Hardware as of Ashoj 30: 5 Marks

(Note: Since the final balance is given here, the statement starts from the Passbook balance to derive the Cash Book balance.)

Particulars	Amount (Rs.)	Total Amount (Rs.)
Balance as per Passbook		49,500
Add:
(ii) Bank charges directly deducted from account by bank	1,700	1,700
		51,200
Less:
(i) Amount directly deposited into bank by Unisa	16,000
(iii) Cheque issued for credit purchases but not yet encashed	8,000
(iv) Payment received and deposited at bank but omitted from Cash Book	32,000	(56,000)
Overdraft as per Cash Book		(4,800)

(e) Bank Reconciliation Statement of Binita Suppliers as of Magh 30: 5 Marks

Particulars	Amount (Rs.)	Total Amount (Rs.)
Balance as per Passbook		69,300
Add:
(ii) Insurance premium paid directly by bank on behalf of office	8,000
(iv) Loan interest directly deducted from account by bank	4,000	12,000
		81,300
Less:
(iii) Cheque issued for credit purchase payment but not yet encashed	5,000
(v) Interest credited by bank but not recorded in Cash Book	3,500	(8,500)
Balance as per Cash Book		72,800

(f) Bank Reconciliation Statement of Office as of Magh 30: 5 Marks

(Note: The data in this question is identical to question ‘e’, so the solution is the same.)

Particulars	Amount (Rs.)	Total Amount (Rs.)
Balance as per Passbook		69,300
Add:
(ii) Insurance premium paid directly by bank on behalf of office	8,000
(iv) Loan interest directly deducted from account by bank	4,000	12,000
		81,300
Less:
(iii) Cheque issued for payment but not yet encashed at bank	5,000
(v) Interest credited by bank into account but not recorded in Cash Book	3,500	(8,500)
Balance as per Cash Book		72,800

4. Additional Important Questions (Extra Numericals)

(Question 1) Prepare a Bank Reconciliation Statement: 5 Marks

Balance as per Cash Book: Rs. 25,000.
Cheque sent to bank for deposit but not yet collected by bank: Rs. 3,000.
Cheque issued and given but not yet presented to bank for payment: Rs. 2,000.
Service charge deducted by bank but not recorded in Cash Book: Rs. 500.
Amount directly deposited into bank by customer: Rs. 1,000.

Particulars	Amount (Rs.)	Total Amount (Rs.)
Balance as per Cash Book		25,000
Add:
— Cheque issued but not presented to bank for payment	2,000
— Amount directly deposited into bank account by customer	1,000	3,000
		28,000
Less:
— Cheque sent to bank for deposit but not yet collected	3,000
— Service charge deducted by bank but not recorded in Cash Book	500	(3,500)
Balance as per Passbook		24,500

(Question 2) Prepare a Bank Reconciliation Statement: 5 Marks

Balance as per Cash Book: Rs. 15,000.
Cheque sent to bank for deposit but not collected: Rs. 4,000.
Cheque issued but not presented for payment at bank: Rs. 5,000.
Interest collected by bank but not recorded in Cash Book: Rs. 600.
Service charge deducted by bank but not recorded in Cash Book: Rs. 300.

Particulars	Amount (Rs.)	Total Amount (Rs.)
Balance as per Cash Book		15,000
Add:
— Cheque issued but not yet presented for encashment at bank	5,000
— Interest credited by bank into account	600	5,600
		20,600
Less:
— Cheque sent to bank for deposit but not yet collected	4,000
— Service charge deducted by bank but not recorded in Cash Book	300	(4,300)
Balance as per Passbook		16,300

(Question 3) Prepare a Bank Reconciliation Statement: 5 Marks

Balance as per Cash Book: Rs. 20,000.
Cheque received but omitted to be sent to bank for deposit: Rs. 6,000.
Interest received of Rs. 800 recorded only in Passbook.
Bank service charge of Rs. 300 deducted only in Passbook.
Rs. 1,000 directly deposited by customer into bank not recorded in Cash Book.

Particulars	Amount (Rs.)	Total Amount (Rs.)
Balance as per Cash Book		20,000
Add:
— Interest received recorded only in Passbook	800
— Amount directly deposited by customer into bank	1,000	1,800
		21,800
Less:
— Cheque received but omitted to be sent to bank for deposit	6,000
— Bank service charge deducted but not recorded in Cash Book	300	(6,300)
Balance as per Passbook		15,500

(Question 4) Prepare a Bank Reconciliation Statement: 5 Marks

Balance as per Passbook as of Chaitra 30: Rs. 20,000.
Amount mistakenly credited by bank: Rs. 5,000.
Cheques worth Rs. 10,000 were sent to bank for deposit, but only Rs. 7,000 worth was deposited.
Rs. 500 was over-added on the credit side of the Passbook.

Particulars	Amount (Rs.)	Total Amount (Rs.)
Balance as per Passbook		20,000
Add:
— Cheques sent for deposit but not yet collected (10,000 – 7,000)	3,000	3,000
		23,000
Less:
— Amount mistakenly credited (added) to account by bank	5,000
— Excess amount mistakenly added on credit side of Passbook	500	(5,500)
Balance as per Cash Book		17,500

(Question 5) Prepare a Bank Reconciliation Statement: 5 Marks

Overdraft balance as per Passbook of Sharma & Company: Rs. 25,000.
Cheque issued but not yet presented at bank: Rs. 4,000.
Bills collected by bank but not shown in Cash Book: Rs. 3,000.
Cheque deposited at bank but not yet collected: Rs. 2,000.
Commission charged by bank but not shown in Cash Book: Rs. 2,500.

Particulars	Amount (Rs.)	Total Amount (Rs.)
Overdraft as per Passbook		(25,000)
Add: (Rules are reversed since the Passbook balance is negative)
— Cheque deposited at bank but not yet collected	2,000
— Commission deducted by bank but not recorded in Cash Book	2,500	4,500
		(20,500)
Less:
— Cheque issued but not yet presented for payment at bank	4,000
— Bills collected by bank but not shown in Cash Book	3,000	(7,000)
Overdraft as per Cash Book		(27,500)

(Question 6) Prepare a Bank Reconciliation Statement: 5 Marks

Balance as per Cash Book: Rs. 14,800.
Rs. 2,000 was mistakenly written in excess on the debit side of the Passbook.
A cheque of Rs. 1,800 sent to bank for deposit was dishonoured (bounced).
Bank mistakenly credited Rs. 900 on the credit side of the Passbook.
Bank credited interest of Rs. 100.

Particulars	Amount (Rs.)	Total Amount (Rs.)
Balance as per Cash Book		14,800
Add:
— Interest credited by bank into account	100
— Amount mistakenly credited on credit side of Passbook by bank	900	1,000
		15,800
Less:
— Excess amount mistakenly written on debit side of Passbook	2,000
— Cheque sent for deposit dishonoured (bounced) by bank	1,800	(3,800)
Balance as per Passbook		12,000