alleryStarting from pass book credit balance, interest credited by the bank is:
AAdded to pass book balance
BSubtracted from pass book balance
CIgnored in the reconciliation
DAdded twice as adjustment
Answer & Solution
Correct answer: B. Subtracted from pass book balance
1. Interest credited by the bank already raised the pass book balance.
2. The cash book has not yet recorded this interest.
3. To arrive at the (lower) cash book balance, interest must be subtracted from the pass book balance.
_Source: ICAI BoS Foundation Paper 1, Ch 3 "Bank Reconciliation Statement", §6.1 (iii)_
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