alleryWhen BRS starts from cash book balance, cheques issued but not yet presented are:
ASubtracted to reach pass book
BRecorded twice as correction
CIgnored as immaterial items
DAdded to reach pass book balance
Answer & Solution
Correct answer: D. Added to reach pass book balance
1. When a cheque is issued, the cash book is credited and bank balance reduces immediately.
2. The bank pass book debits the entity only when the cheque is presented for payment.
3. Hence the pass book still shows the higher balance, so the cheque amount is added to the cash book balance to arrive at the pass book figure.
_Source: ICAI BoS Foundation Paper 1, Ch 3 "Bank Reconciliation Statement", §6.1 example_
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