<\/span><\/h2>\nWe’ve already learned a few terminologies like credit, debit, cashbook, and passbook from the previous chapters. Some of the topics covered in NCERT Solutions For Class 11 Accountancy Chapter 5 Bank Reconciliation Statement are required. Here’s a quick rundown of what each of those terms means.\u00a0<\/p>\n
Individual businesses keep track of their transactions in a document known as a cashbook.\u00a0<\/p>\n
The firm records an entry in the cash book whenever it makes a deposit or withdrawal into or from a bank account. When money is put in the account, a debit entry is created, and when money is removed from the account, a credit entry is made.\u00a0The bank keeps track of these transactions in the same way that it keeps track of currency.\u00a0<\/p>\n
\u00a0Passbooks are used to keep track of these entries. Customers’ deposits go on the credit side of the passbook, while withdrawals go on the debit side. We may have a\u00a0favorable\u00a0or\u00a0unfavorable\u00a0balance depending on the amount of money withdrawn and deposited (overdraft).\u00a0<\/p>\n
Why BRS?<\/strong>\u00a0<\/p>\nWe match the balances at the end of a given period of the financial year for the reasons stated above. It might happen at any time. When balancing the bank account, the cashbook and passbook balances may differ, thus a new document or statement is prepared to account for the “missing money” that caused the gap. All of such transactions are accounted for in this report. To access the NCERT Solutions For Class 11 Accountancy Chapter 5. Download the PDF<\/p>\n
<\/span>Access NCERT Solutions For Class 11 Accountancy Chapter 5<\/span><\/h3>\nShort Answers to NCERT Accountancy Solutions Class 11 Chapter 5<\/b><\/p>\n<\/span>1. State the need for the preparation of a bank reconciliation statement?<\/b><\/span><\/h3>\nPreparing a bank reconciliation statement is necessary for:<\/span><\/p>\n\n- Helps in identifying the difference between cash book and pass book.<\/span><\/li>\n
- It helps in knowing the actual bank balance.<\/span><\/li>\n
- Helps in detection and prevention of frauds and errors in recording banking transactions<\/span><\/li>\n
- It helps in knowing the actual bank balance.<\/span><\/li>\n
- Helps in creating revised Cash Book that reflects true bank balance.<\/span><\/li>\n
- It helps in preventing embezzlement of money from the bank account.<\/span><\/li>\n<\/ol>\n
<\/span>2. What is a bank overdraft?<\/b><\/span><\/h3>\nBank overdraft is created when there is a withdrawal, which is over the bank balance available in account. It is an obligation to the account holder.<\/span><\/p>\n3. Briefly explain the statement \u2018wrongly debited by the bank\u2019 with the help of an example.<\/b><\/p>\n
It means that the bank has debited the amount from the users account for some invalid reason. The following instance can help in understanding.<\/span><\/p>\nRajesh\u2019s account is charged overdraft of Rs.5000 even though his account has sufficient credit balance. It can happen when the cashier has done an incorrect entry in the account.<\/span><\/p>\n4. State the causes of difference occurred due to time lag.<\/b><\/p>\n
The following are the causes of difference occurred due to time lag<\/span><\/p>\n\n- Cheque issued by the firm is not yet presented for payment.<\/span><\/li>\n
- Cheque deposited into the bank but yet to be realized.<\/span><\/li>\n
- Direct debits done by the bank on behalf of the customer.<\/span><\/li>\n
- Amount deposited directly into the bank account.<\/span><\/li>\n
- Interest and dividends that are not collected by the bank.<\/span><\/li>\n
- Direct payments made by the bank on behalf of the customers<\/span><\/li>\n
- Cheques that are deposited or bills discounted which is dishonoured<\/span><\/li>\n<\/ol>\n
<\/span>5. Briefly explain the term favourable balance as per cash book<\/b><\/span><\/h3>\nWhen the total of the debit column of the Cash Book is more than the total credit column of Cash Book, it is known as debit balance or favourable balance. Favourable balance is an asset to an account holder. Favourable balance can also be defined as surplus of deposits over withdrawals.<\/span><\/p>\n6. Enumerate the steps to ascertain the correct cash book balance.<\/b><\/p>\n
Difference between cash book and pass book can arise due to some transactions that are recorded in pass book not being present in the cash book. This can be rectified by recording those transactions in the cash book. The balance thus obtained is called as adjusted balance or amended balance. The following steps describe this process.<\/span><\/p>\n\n- Note bank balance as per cash book.<\/span><\/li>\n<\/ol>\n
\u00a0 \u00a0 \u00a0 2. Make corrections for errors committed in the cash book.<\/span><\/p>\n\u00a0 \u00a0 \u00a0 3. Transactions present only on passbook\u2019s credit side must be updated in debit side of\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0cashbook<\/span><\/p>\n\n- Transactions present only on the passbook\u2019s debit side must be updated in debit side of cashbook<\/span><\/li>\n<\/ol>\n
<\/span>7.Calculate new cash book balance and use it to prepare a Bank Reconciliation Statement.<\/strong><\/span><\/span><\/h3>\n<\/span>Long Answers for NCERT Accountancy Solutions Class 11 Chapter 5<\/b><\/span><\/h2>\n<\/span>1.What is a bank reconciliation statement? Why is it prepared?<\/b><\/span><\/h2>\nA statement that is prepared to rectify or tally the difference that exists between the user passbook and cashbook of firm, so that the cause of difference can be determined and rectified is known as Bank Reconciliation Statement. Following are the reasons for its preparation:<\/span><\/p>\n\n- To determine if the balance reported by the company\u2019s cashbook is the correct amount.<\/span><\/li>\n
- Rectifying any errors present in cash book so that proper statements can be generated.<\/span><\/li>\n
- Prevents fraudulent activities like embezzlement and improves accountability.<\/span><\/li>\n
- To discover any errors made by bank and applying corrective measures.<\/span><\/li>\n<\/ol>\n
Helps check the accuracy of information recorded in both the books.<\/span><\/p>\n<\/span>2. Explain the reasons where the balance shown by the bank passbook does not agree with the balance as shown by the bank column of the cash book.<\/b><\/span><\/h3>\nHere are some of the reasons which results in mismatch between bank passbook balance and bank column of cash book.<\/span><\/p>\n\n- Timing Differences<\/b>:<\/span><\/li>\n
- Cheques issued by the firm but not yet presented for payment<\/b>: Cheques issued by the firm to the suppliers or creditors are immediately recorded on the credit side of the cashbook. However, there will be a time gap when the receiving party presents it to the bank. So the bank cannot debit the amount. It will result in changes in the balance amount between two books.<\/span><\/li>\n
- Cheques are deposited into the bank but not yet collected<\/b>: A firm receives cheques from its debtors\/customers, which are then immediately recorded in the debit side of the cashbook. However, when those cheques are deposited into the bank, the bank credits the firm\u2019s account only after the cheques are actually realised. It creates a difference between the two balances.<\/span><\/li>\n
- Direct debits made by the bank on behalf of the customer<\/b>: Bank deducts various charges like cheque collection charges, interest on overdraft, check bounce charges, the firm will not be aware of such debits and hence these changes will not be reflected in the firm\u2019s cash book. Due to this reason the cashbook will not be in sync with the passbook.<\/span><\/li>\n
- 4<\/span>. Amounts directly deposited in the bank account<\/b>: When debtors or customers directly deposit money into the firm\u2019s bank account, the firm will not be aware of such deposits. Due to this, these entries will not be recorded into the cashbook. This will also create an imbalance between the bank passbook and firm\u2019s cashbook.<\/span><\/li>\n
- Interest and dividends collected by the bank<\/b>: The banks collects interest and dividend on behalf of the customer. It will not be known to the customer and hence will not be recorded into the firm\u2019s cash book. This creates an imbalance between the bank passbook and firm\u2019s cashbook.<\/span><\/li>\n
- Direct payments made by bank on behalf of customers:<\/b> When the customers give standing instructions to the bank for making payments to the third parities like telephone bill, insurance premium, rent taxes etc., the firm will not be aware of these payments and hence such transactions will not be recorded into the firm\u2019s cashbook. It is also a reason for imbalance.<\/span><\/li>\n
- Cheques deposited and bills dishonoured<\/b>: A cheque deposited by the firm if dishonoured or a bill of exchange drawn by the business firm which is discounted with the bank is dishonoured on the date of maturity, the same is debited to customer\u2019s account by the bank. This information is not available to the firm immediately, and it will not be recorded in the firm\u2019s cashbook. This will also create an imbalance between the bank passbook and the firm\u2019s cashbook.<\/span><\/li>\n
- Differences due to recording Errors<\/b>: The difference between the two balances could be due to an error of human nature. The following types of error can occur<\/span><\/li>\n
- Errors committed in recording transaction by the firm<\/b>: When wrong recording of transactions relating to incorrect totalling, cheques issued, and cheques deposited etc. are committed by the firm in the cashbook. It will create an imbalance between the bank passbook and the firm\u2019s cashbook.<\/span><\/li>\n
- Errors committed in recording transactions by the bank<\/b>: When wrong recording of transactions related to cheques issued, wrong totalling, and cheques deposited etc. are committed by the bank in the passbook. It will create an imbalance between the bank passbook and the firm\u2019s cashbook.<\/span><\/li>\n<\/ol>\n
<\/span>3. Explain the process of preparing bank reconciliation statement with amended cash balance.<\/b><\/span><\/h3>\n
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