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Direct deposit by a customer into the firm's bank account, when starting from cash book balance, is:
ASubtracted from cash book balance
BNot required to be adjusted
CReported as a contingent item
DAdded to the cash book balance
Answer & Solution
Correct answer: D. Added to the cash book balance
1. The customer's direct deposit raised the pass book balance immediately.
2. The cash book has no entry until the firm is informed.
3. To match pass book from cash book, add the direct deposit amount.
_Source: ICAI BoS Foundation Paper 1, Ch 3 "Bank Reconciliation Statement", §6.1 (vii)_
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