alleryA debit balance in the cash book represents which balance in the pass book?
ADebit balance (overdraft)
BCredit balance (favourable)
CZero balance always
DAdjusted nil balance
Answer & Solution
Correct answer: B. Credit balance (favourable)
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_
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