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Question
During the preparation of a bank reconciliation statement, some transactions were discovered to have caused the difference between the cashbook balance and the bank statement balance. Which of the following will be required for cashbook adjustment?
A. Uncredited lodgement
B. Cheque paid in by the company but dishonoured
C. Amount incorrectly debited by the bank to the account
D. Amount incorrectly credited by the bank to the account
E. Cheque issued to Mr. Mohammed by the company but not yet presented in the bank
Answer
Answer:
B. Cheque paid in by the company but dishonoured
Explanation:
A dishonoured cheque that was deposited into the company’s account but later rejected by the bank must be adjusted in the cashbook to reflect the correct balance. This adjustment ensures the cashbook is accurate, as the initial entry of the cheque would have increased the cashbook balance incorrectly.
- Tags: Bank Reconciliation, Cashbook Adjustment
- Level: Level 1
- Topic: Bank reconciliations
- Series: MAY 2016
- Uploader: Joseph