Ready Reference :
+ Items [items which increases the Cash Book Balances or decreases the Pass Book Balance]
- Cheques sent for collection to the bank but not yet credited / collected by the bank.
- Cheques deposited into the bank but dishonoured.
- Direct Payments made by the bank.
- Bank charge, commmission etc. debited by the bank.
- Cheques issued but omitted to be recorded in the Cash Book.
– Item [Items which decreases the Cash Book Balance or increases the Pass Book Balance]
- Cheques issued but not yet presented.
- Credits made by the bank for interest.
- Amount directly deposited by the customers into the Bank.
- Interest and dividend collected by the Bank.
- Cheques paid into the bank but omitted to be recorded in the Cash Book.
Amended Cash Book Method :
Introduction :
So far we have studied the preparation Bank Reconcilliation Statement simply by reconciling the causes of differences between the Cash Book and Pass Book. In actual practice adjustments are done in the Cash Book by comparing the Bank column of Cash Book with the Bank Statement and after that B.R. Statement is prepared. It is called Amended Cash Book Method.
Procedure :
- Adjusted Cash Book is prpared starting with the Balance of the Cash Book given in the question.
- All errors that have been committed in the Cash Book will have to be rectified by passing adjusting entries in the Cash Book.
Usual or General Errors are –
- Overcasting or Undrcasting of Debit / Credit Column of Cash Book.
- Cheques deposited or Issued but omitted to be entered in the Cash Book.
- Incorrect amount (if any) entered in the Cash Book.
- Entries on the incorrect side or in the wrong column of Cash Book.
- Any amount recorded twice in the Cash Book.
- Certain amounts for which Bank has debited our A/c will be recorded on the Credit side of Cash Book. Such items are
- Interest charged by the bank on overdraft etc.
- Debits made by the bank for the bank charges, commission etc.
- Direct payments made by the Bank on behalf of the A/c holder.
- Cheques sent for collection but dishonoured by the bank.
- Cash Book is then balanced and the new Balance of the Cash Book is taken as the Starting point for preparing the B.R. Statement.
Important :
It should be noted that the following items must not be recorded in the Amended Cash Book.
- Cheques deposited into the Bank but not yet credited by the bank.
- Cheques Issued but yet not presented for payment.
- Any wrong entry in the Pass Book.
Points to Remember :
- Amended or adjusted Cash Book is started with the given balance of bank as per Cash Book.
- Closing Balance of the adjusted Cash Book is the opening balance of Bank Reconcilliation statement.
CBSE Accountancy Class XI ( By Mr. Kailash Gururani )
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