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A cheque of ₹4,000 was deposited but dishonoured; intimation not yet received. Adjusted cash book treatment is:
ADebit cash book by ₹4,000
BNo adjustment needed yet
CCredit cash book by ₹4,000 (typical)
DCapitalise the dishonoured cheque
Answer & Solution
Correct answer: C. Credit cash book by ₹4,000 (typical)
1. When deposited, the cash book was debited (i.e. balance increased).
2. On dishonour the entry must be reversed in the adjusted cash book.
3. Hence credit the cash book with ₹4,000 to restore the true balance.
_Source: ICAI BoS Foundation Paper 1, Ch 3 "Bank Reconciliation Statement", §7.2 ¶3_
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