CA Foundation Accounting — practice by topic

1. A Bank Reconciliation Statement (BRS) compares the bank column of the cash book maintained by the entity with the pass book maintained by the bank. 2. The two balances often differ due to timing, transactions recorded only by one party, or errors. 3. The BRS identifies each cause of the difference so that the true bank balance can be ascertained. 4. It is not a tool for listing customers, computing interest, or preparing the bank's own accounts. _Source: ICAI BoS Foundation Paper 1, Ch 3 "Bank Reconciliation Statement", §4 ¶1_

1. The entity treats the bank as a debtor in its own books, so a deposit increases the bank balance on the debit side of the cash book. 2. The bank treats the same entity as a creditor in its books, so a deposit is shown as credit in the pass book. 3. A debit cash book balance therefore corresponds to a credit (favourable) pass book balance, not a debit one. _Source: ICAI BoS Foundation Paper 1, Ch 3 "Bank Reconciliation Statement", §3 ¶6_

1. The three broad categories of causes are timing differences, transactions done only by one party, and errors. 2. Bank charges debited by the bank fall under transactions known only to the bank initially. 3. Cash sales are routine receipts entered the same way in cash book and don't produce a bank-vs-cash-book difference at all. 4. Hence option D is the odd one out. _Source: ICAI BoS Foundation Paper 1, Ch 3 "Bank Reconciliation Statement", §6 ¶1_