alleryDirect 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)_
Keep practising Bank Reconciliation Statement
Browse all Bank Reconciliation Statement questions for CA Foundation, or explore more Accounting topics.
Related questions
Passbook exceeds the cash book. Which is the likely cause?After reconciling, differences caused by the firm's own errors are fixed inCustomers commonly use bank statements toWhich is not a usual reason for a cash book and passbook difference?A discrepancy found during reconciliation may be recorded as aThe purpose of account reconciliation under GAAP is to provideIssuing a cheque without adequate funds and depositing cover later is calledMICR information on cheques mainly supports