Banking and Cash Transactions

Since the interest is credited (added) by the bank and on the other hand, no amount is added to the cash book upto 31 March, there would be a difference in the two books.

Since the cheque has not been deposited, the bank would not add any amount in the customer's balance, but the amount has already been added to the cash book. Hence, cash book balance would be higher than passbook balance.

(A)       Balance due to the customer is positive balance from customer's view (B)       Overdraft is due to bank by the customer.

The cash book belongs to business. So the recording is done by business.

The errors made in the cash book are adjusted in the adjusted cash book The errors made by the bank are not to be adjusted in the cash book

The bank charges recorded twice in the cash book will increase the overdraft. If it is a positive balance in the books, the balance is reduced.

(A)       The entries are recorded from the angle of pass book. Balance Rs. 3, 520 - 12, 000 - 3, 000 = Rs. 11, 480 overdraft (B)       3, 520 - 12, 000 - 3, 000 = Rs. 11, 480 balance (C)       3, 520 - 12, 000 + 3, 000 = Rs. 5, 480 balance (D)       3, 520 - 12, 000 + 3, 000 = Rs. 5, 480 balance

Interest is to be charged from the customer is debited in the pass book.

Statutory Liquidity Ratio (SLR) is the minimum percentage of deposits that a commercial bank must maintain in the form of liquid cash, gold, or other securities. Cash in hand is a valid component.

A negotiable instrument is a written order or unconditional promise to pay a fixed sum of money on demand or at a certain time. A will is a legal declaration by which a person names one or more persons to manage his or her estate and provides for the distribution of his or her property at death.  A will is not a negotiable instrument.

When a deposited cheque is dishonoured, the entry must be reversed. Since the original deposit was recorded on the debit side of the cash book, the dishonour is recorded on the credit side.

A bill receivable account records the receipt and maturity of bills. When a discounted bill is dishonored, the bank debits the customer's account, not the bills receivable account, because the bill is already out of the business's possession.

Non-acceptance of a bill means the bill was never formally accepted as a legal instrument, so there is no bill to dishonor in the books of accounts.

A contra entry occurs when a transaction affects both the cash and bank columns of the cash book simultaneously, such as depositing cash into the bank or withdrawing cash from the bank for office use.

An amended cash book is updated only for transactions that have already occurred in the bank pass book but have not yet been recorded in the business's cash book.