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Cheques deposited but not yet credited, when starting BRS from a debit (unfavourable) pass book balance, are:
AAdded to pass book balance
BIgnored as small timing item
CSubtracted from pass book balance
DCapitalised as a deposit asset
Answer & Solution
Correct answer: C. Subtracted from pass book balance
1. Pass book debit balance means overdraft (favourable to bank).
2. Cheques deposited but not collected were debited in cash book (reducing overdraft per cash book).
3. Pass book still shows higher overdraft because the bank has not credited yet.
4. To reach cash book, subtract uncollected deposits from the pass book overdraft figure.
_Source: ICAI BoS Foundation Paper 1, Ch 3 "Bank Reconciliation Statement", T/F #10_
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