IGCSE Accounting Paper-1: Specimen Questions with Answers 267 - 268 of 338

Passage

The bank column of Abhay Nigam՚s cash book had a credit balance brought down of $ 1450 on 1 April 2019. The bank statement on the same date showed a debit balance of $ 230.

Following things were discovered by Abhay when he compared his cash book with the bank statement-

Items on the Bank Statement but Not in the Cash Book

Bank charges of $ 100

Dividend received $ 500

Insurance premium paid by bank $ 200

Direct deposit of $ 1000 by Robert, a customer

Items in the Cash Book but Not in the Bank Statement

Cheque received from Kundan of $ 250 was recorded twice in the cash book.

Cheque issued to Namrata $ 850, a credit supplier

Cash deposited $ 120

Question 267 (4 of 6 Based on Passage)

Edit

Write in Brief

One Liner▾

What is meant by the debit balance in the bank statement? (Marks 1)

Explanation

Debit balance in the bank statement indicates bank overdraft i.e.. amount due to the bank or the excess amount withdrawn/issued payment over the amount deposited in the bank.

Question 268 (5 of 6 Based on Passage)

Edit

Write in Brief

One Liner▾

State any two reasons for difference in bank balance of cash book and the bank statement that occurs due to the time lag. (Marks 2)

Explanation

(i) Cheque issued to a creditor but yet presented for payment

(ii) Cheque paid into the bank but not yet collected by the bank

  • Cheque issued to a creditor but yet presented for payment- When cheques are issued by the business, these are immediately entered on the credit side of the bank column of the cash book but the payee may present these cheques to the bank at some later date. The bank will debit the business account when these are presented for payment.
  • Cheque paid into the bank but not yet collected by the bank- When cheques are deposited into the bank, the business immediately enters it on the debit side of the bank column of the cash book which increases the bank balance as per the cash book. But the bank credits the business account when these are actually realized.

🎯 Select Paper