On 1st January 21 Mr Dawood started business in Oman. He opened a bank account with bank muscat. The accountant used to maintain the Cash and bank transactions in a cash book. In the initial month the cash book and the Pass book were showing same balance, however as the business grew the number of bank transactions increased and then the balance as per the cash book and bank book were not same. The accountant was not able to find the differences between the two and appointed you to help him in preparing the Bank reconciliation. You have collected the data of cash book and pass book for the month of September and found the following. a) Cheques deposited in bank for RO 15,200 of which cheque for RO 7,200 were cleared in October b) The cheques issued for RO 10,800 of which cheque for RO 5,800 were presented to the bank till September. c) There was a credit in the bank account for insurance claim amounting to RO 2,000 d) The bank debited the account for the Loan instalment for RO 5,000. e) The balance as per the cash book on 30 September was RO 8,500. The Net effect of items not recorded in Pass Book is. a. Pass book balance is less by RO 2200 b. Pass book balance is less by RO 2200 c. Pass book balance is more RO 5000 d. Pass book balance is less by RO 7200

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On 1st January 21 Mr Dawood started business in Oman. He opened a bank account with bank muscat. The accountant used to maintain the Cash and bank transactions in a cash book. In the initial month the cash book and the Pass book were showing same balance, however as the business grew the number of bank transactions increased and then the balance as per the cash book and bank book were not same. The accountant was not able to find the differences between the two and appointed you to help him in preparing the Bank reconciliation. You have collected the data of cash book and pass book for the month of September and found the following. a) Cheques deposited in bank for RO 15,200 of which cheque for RO 7,200 were cleared in October b) The cheques issued for RO 10,800 of which cheque for RO 5,800 were presented to the bank till September. c) There was a credit in the bank account for insurance claim amounting to RO 2,000 d) The bank debited the account for the Loan instalment for RO 5,000. e) The balance as per the cash book on 30 September was RO 8,500. The Net effect of items not recorded in Pass Book is. a. Pass book balance is less by RO 2200 b. Pass book balance is less by RO 2200 c. Pass book balance is more RO 5000 d. Pass book balance is less by RO 7200

Definition Definition Financial journal in which only cash-related transactions are recorded. Cash transactions are posted chronologically in the cash book, which is also called a subsidiary book. All the cash receipts are recorded on the debit side and all the cash payments are recorded on the credit side. An important point to remember is that the cash book never shows a credit balance; only a debit balance is shown in the cash book.

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