NCERT Solutions for Class 11 Accountancy Chapter 5: Bank Reconciliation Statement (NCERT 2026–27)

These Class 11 Accountancy Chapter 5 solutions cover Bank Reconciliation Statement (BRS) from the NCERT Accountancy textbook (Financial Accounting–I), updated for the 2026–27 session. You will find the complete Questions for Practice — 6 short-answer and 3 long-answer theory questions plus all 18 numerical problems — reproduced verbatim and solved. Every BRS is prepared step by step in the two-column (+/–) format, fully balanced and verified against the NCERT answer key, with the starting balance (cash book or passbook) clearly stated. Below the exercise you also get extra practice, MCQs, Assertion–Reason questions, exam tips and FAQs.

Class: 11 Subject: Accountancy Book: Financial Accounting–I Chapter: 5 Topic: Bank Reconciliation Statement Session: 2026–27

On this page

Chapter overview
Key terms & BRS format
Short Answers
Long Answers
Numerical Questions — full solutions
Extra practice questions
MCQs & Assertion–Reason
Exam tips & common mistakes
FAQs

Class 11 Accountancy Chapter 5 – Overview

A Bank Reconciliation Statement (BRS) is a statement prepared to reconcile (tally) the bank balance shown by a firm’s cash book with the balance shown by the passbook (bank statement) on a particular date. The two balances usually differ because of timing differences — cheques issued but not yet presented for payment, cheques deposited but not yet collected, direct deposits and direct payments by the bank, interest and dividends collected by the bank, bank charges, and dishonoured cheques — or because of errors made by the firm or the bank. By listing these items of difference and adding or deducting them from the starting balance, the BRS explains the gap and helps ascertain the correct bank balance. This chapter teaches you to start from either book, to handle favourable balances and overdrafts, and to treat errors using the rules of rectification.

Key Terms & BRS Format

Bank Reconciliation Statement (BRS): a statement that reconciles the bank balance per cash book with the balance per passbook by showing the items of difference between the two.

Passbook / bank statement: a copy of the customer’s account as kept by the bank. Deposits appear on the credit side and withdrawals on the debit side — the opposite of the cash book.

Favourable balance: a debit balance as per cash book (money in the bank) = a credit balance as per passbook.

Unfavourable balance / overdraft: a credit balance as per cash book (money owed to the bank) = a debit balance as per passbook (shown as Dr. or OD).

Two-column (+ / –) BRS rule of thumb (starting from cash-book balance):

ADD (+): cheques issued but not presented; amounts directly deposited by customers; interest/dividend credited by bank; any item that increases the passbook balance.

LESS (–): cheques deposited but not yet collected; bank charges, interest on overdraft, insurance/LIC and standing-order payments by bank; dishonoured cheques; any item that reduces the passbook balance.

When you start from the passbook balance, reverse every treatment. The total of the (+) column must equal the total of the (–) column, the balancing figure being the other book’s balance.

Questions for Practice – Short Answers

All questions below are reproduced verbatim from the NCERT textbook. Answers are original and written in exam-ready style.

1. State the need for the preparation of bank reconciliation statement?

ANSWER The balance of the bank column of the cash book and the balance shown by the passbook should be equal, but in practice they rarely tally. A bank reconciliation statement is needed to find out the causes of this difference and to reconcile (tally) the two balances. Its main needs are: (i) it helps locate the items causing the difference, such as cheques not yet presented or collected; (ii) it brings out errors and omissions in the cash book or passbook so they can be corrected; (iii) it acts as a moral check on the staff handling cash and bank transactions and helps detect frauds and delays; and (iv) it enables the firm to ascertain the correct bank balance for its records.

2. What is a bank overdraft?

ANSWER A bank overdraft is a facility by which a current-account holder is allowed to withdraw more money than the balance standing to his credit, up to an agreed limit. In effect the firm borrows from the bank. An overdraft appears as a credit balance in the cash book and as a debit balance in the passbook (often marked Dr. or OD). It is treated as a negative figure while preparing the bank reconciliation statement.

3. Briefly explain the statement ‘wrongly debited by the bank’ with the help of an example.

ANSWER ‘Wrongly debited by the bank’ means the bank has debited (reduced) the firm’s account by mistake for an amount that should not have been charged to it — an error committed by the bank. For example, suppose the bank debits the firm’s account with ₹500 of charges that actually belong to another customer, or posts a withdrawal of another account to this firm’s account. Because of this wrong debit, the passbook balance becomes less than the cash book balance, so ₹500 has to be adjusted in the bank reconciliation statement until the bank corrects the error.

4. State the causes of difference occurred due to time lag.

ANSWER A time lag (timing difference) arises because the firm and the bank record the same transaction on different dates. The chief causes are: (i) Cheques issued by the firm but not yet presented for payment; (ii) cheques deposited into the bank but not yet collected/credited; (iii) direct debits made by the bank, e.g. bank charges, interest on overdraft, standing-order payments; (iv) amounts directly deposited into the bank by customers; (v) interest and dividends collected by the bank on the firm’s behalf; (vi) direct payments made by the bank (telephone bill, insurance premium, rent, taxes); and (vii) cheques deposited or bills discounted that are dishonoured.

5. Briefly explain the term ‘favourable balance as per cash book’.

ANSWER ‘Favourable balance as per cash book’ means a debit balance in the bank column of the cash book. It shows that the firm has money lying to its credit at the bank, i.e. its deposits exceed its withdrawals. This same balance is a credit (favourable) balance as per the passbook. It is the opposite of an overdraft, where the cash book shows a credit balance.

6. Enumerate the steps to ascertain the correct cash book balance.

ANSWER The correct (amended) cash book balance is found by adjusting the cash book for items appearing in the passbook but not yet recorded in the cash book, and for the firm’s own errors. The steps are: (i) Take the existing bank balance as per the cash book as the starting point. (ii) Add all items that increase the bank balance but are not yet entered in the cash book — amounts directly deposited by customers, interest and dividends collected by the bank, and the firm’s under-recordings of receipts. (iii) Deduct all items that reduce the balance but are not yet entered — bank charges, interest on overdraft, insurance premium and other direct payments by the bank, dishonoured cheques, and the firm’s under-recordings of payments. (iv) Correct any errors in the cash book. The resulting figure is the correct/amended cash book balance; the BRS is then prepared with this balance and the passbook balance.

Questions for Practice – Long Answers

1. What is a bank reconciliation statement. Why is it prepared?

ANSWER Meaning: A bank reconciliation statement is a statement prepared periodically by a firm to reconcile the bank balance shown by the bank column of its cash book with the balance shown by the passbook (or bank statement) on a particular date. It lists the items responsible for the difference, adding or deducting them from one balance so as to arrive at the other. Why it is prepared: (i) The cash book balance and the passbook balance usually do not agree because of timing differences and errors; the BRS explains exactly why. (ii) It helps detect and locate errors and omissions in both sets of records so they may be rectified. (iii) It provides a moral check on staff and helps detect any fraud, embezzlement or undue delay in clearing cheques. (iv) It enables the firm to determine the correct bank balance to be shown in the balance sheet. (v) Regular reconciliation keeps the cash book up to date and makes the firm aware of dishonoured cheques and uncredited deposits.

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.

ANSWER The differences arise from two broad causes — timing differences and errors. A. Timing differences: (i) Cheques issued but not yet presented — entered in the cash book at once but the bank debits the account only when the cheque is presented, so the passbook shows a higher balance. (ii) Cheques deposited but not yet collected — entered in the cash book at once but credited by the bank only on realisation, so the passbook shows a lower balance. (iii) Direct debits by the bank — bank charges, interest on overdraft and bounced-cheque charges reduce the passbook balance before the firm records them. (iv) Amounts directly deposited by customers increase the passbook balance before the firm knows. (v) Interest and dividends collected by the bank increase the passbook balance. (vi) Direct payments by the bank on standing instructions (insurance, rent, telephone) reduce the passbook balance. (vii) Dishonour of cheques/bills reduces the passbook balance. B. Errors: (i) errors committed by the firm in the cash book — omission, wrong amount, wrong side, casting/carry-forward errors; and (ii) errors committed by the bank in the passbook — wrong posting, wrong debit/credit or wrong totalling. Each of these makes the two balances differ until adjusted.

3. Explain the process of preparing bank reconciliation statement with amended cash balance.

ANSWER In practice the BRS is prepared after adjusting the cash book, because some items appear in the passbook before they are recorded in the cash book. The process has two stages: Stage 1 – Amend the cash book. Start with the bank balance as per the cash book. Add the items credited by the bank but not yet in the cash book (interest/dividend collected, amounts directly deposited by customers, the firm’s own omissions of receipts). Deduct the items debited by the bank but not yet in the cash book (bank charges, interest on overdraft, insurance/rent paid by bank, dishonoured cheques, the firm’s own omissions of payments) and correct any cash-book errors. The balancing figure is the amended (correct) cash book balance. Stage 2 – Prepare the BRS. Using the amended cash book balance as the starting point, the only differences now left are the pure timing items — cheques issued but not yet presented (added) and cheques deposited but not yet collected (deducted). Adjusting these gives the passbook balance, and the statement tallies. This method gives a more accurate cash book balance for the balance sheet.

Numerical Questions – Full Solutions

Each statement is prepared in the NCERT two-column (+ / –) format. The balancing figure (the other book’s balance) is shown in bold, and both columns are equal — the answer matches the NCERT key in every case.

Favourable balance of cash book and passbook

1. From the following particulars, prepare a bank reconciliation statement as at March 31, 2017. (i) Balance as per cash book ₹ 3,200 (ii) Cheque issued but not presented for payment ₹ 1,800 (iii) Cheque deposited but not collected upto March 31, 2014 ₹ 2,000 (iv) Bank charges debited by bank ₹ 150

SOLUTION

Particulars	Plus (+) ₹	Minus (–) ₹
Balance as per cash book	3,200	–
Cheque issued but not presented for payment	1,800	–
Cheque deposited but not collected	–	2,000
Bank charges debited by the bank	–	150
Balance as per passbook	–	2,850
Total	5,000	5,000

Balance as per passbook = ₹ 2,850. Check: 3,200 + 1,800 − 2,000 − 150 = 2,850. ✓

2. On March 31, 2017 the cash book showed a balance of ₹ 3,700 as cash at bank, but the bank passbook made up to same date showed that cheques for ₹ 700, ₹ 300 and ₹ 180 respectively had not presented for payment, Also, a cheque amounting to ₹ 1,200 deposited into the account had not been credited. Prepare a bank reconciliation statement.

SOLUTION

Particulars	Plus (+) ₹	Minus (–) ₹
Balance as per cash book	3,700	–
Cheques issued but not presented (700 + 300 + 180)	1,180	–
Cheque deposited but not credited	–	1,200
Balance as per passbook	–	3,680
Total	4,880	4,880

Balance as per passbook = ₹ 3,680. Check: 3,700 + 1,180 − 1,200 = 3,680. ✓

3. The cash book shows a bank balance of ₹ 7,800. On comparing the cash book with passbook the following discrepancies were noted: (a) Cheque deposited in bank but not credited ₹ 3,000 (b) Cheque issued but not yet present for payment ₹ 1,500 (c) Insurance premium paid by the bank ₹ 2,000 (d) Bank interest credit by the bank ₹ 400 (e) Bank charges ₹ 100 (d) Directly deposited by a customer ₹ 4,000

SOLUTION

Particulars	Plus (+) ₹	Minus (–) ₹
Balance as per cash book	7,800	–
Cheque deposited but not credited	–	3,000
Cheque issued but not presented for payment	1,500	–
Insurance premium paid by the bank	–	2,000
Bank interest credited by the bank	400	–
Bank charges	–	100
Amount directly deposited by a customer	4,000	–
Balance as per passbook	–	8,600
Total	13,700	13,700

Balance as per passbook = ₹ 8,600. Check: 7,800 − 3,000 + 1,500 − 2,000 + 400 − 100 + 4,000 = 8,600. ✓

4. Bank balance of ₹ 40,000 showed by the cash book of Atul on December 31, 2016. It was found that three cheques of ₹ 2,000, ₹ 5,000 and ₹ 8,000 deposited during the month of December were not credited in the passbook till January 02, 2017. Two cheques of ₹ 7,000 and ₹ 8,000 issued on December 28, were not presented for payment till January 03, 2017. In addition to it bank had credited Atul for ₹ 325 as interest and had debited him with ₹ 50 as bank charges for which there were no corresponding entries in the cash book. Prepare a bank reconciliation statement as on December 31, 2016.

SOLUTION

Particulars	Plus (+) ₹	Minus (–) ₹
Balance as per cash book	40,000	–
Cheques deposited but not credited (2,000 + 5,000 + 8,000)	–	15,000
Cheques issued but not presented (7,000 + 8,000)	15,000	–
Interest credited by the bank	325	–
Bank charges debited by the bank	–	50
Balance as per passbook	–	40,275
Total	55,325	55,325

Balance as per passbook = ₹ 40,275. Check: 40,000 − 15,000 + 15,000 + 325 − 50 = 40,275. ✓

5. On comparing the cash book with passbook of Naman it is found that on March 31, 2014, bank balance of ₹ 40,960 showed by the cash book differs from the bank balance with regard to the following: (a) Bank charges ₹ 100 on March 31, 2017, are not entered in the cash book. (b) On March 21, 2017, a debtor paid ₹ 2,000 into the company’s bank in settlement of his account, but no entry was made in the cash book of the company in respect of this. (c) Cheques totaling ₹ 12,980 were issued by the company and duly recorded in the cash book before March 31, 2017, but had not been presented at the bank for payment until after that date. (d) A bill for ₹ 6,900 discounted with the bank is entered in the cash book without recording the discount charge of ₹ 800. (e) ₹ 3,520 is entered in the cash book as paid into bank on March 31st, 2017, but not credited by the bank until the following day. (f) No entry has been made in the cash book to record the dishonour on March 15, 2017 of a cheque for ₹ 650 received from Bhanu.

SOLUTION

Particulars	Plus (+) ₹	Minus (–) ₹
Balance as per cash book	40,960	–
Bank charges not entered in cash book	–	100
Amount directly deposited by a debtor	2,000	–
Cheques issued but not presented for payment	12,980	–
Discount charge on bill not recorded in cash book	–	800
Cheque paid in but not yet credited by the bank	–	3,520
Cheque received from Bhanu dishonoured, not recorded	–	650
Balance as per passbook	–	50,870
Total	55,940	55,940

Balance as per passbook = ₹ 50,870. Check: 40,960 − 100 + 2,000 + 12,980 − 800 − 3,520 − 650 = 50,870. ✓

6. Prepare bank reconciliation statement as on December 31, 2017. This day the passbook of Mr. Himanshu showed a balance of ₹ 7,000. (a) Cheques of ₹ 1,000 directly deposited by a customer. (b) The bank has credited Mr. Himanshu for ₹ 700 as interest. (c) Cheques for ₹ 3000 were issued during the month of December but of these cheques for ₹ 1,000 were not presented during the month of December.

SOLUTION Here the starting point is the passbook balance, so each item is treated in reverse.

Particulars	Plus (+) ₹	Minus (–) ₹
Balance as per passbook	7,000	–
Cheque directly deposited by a customer	–	1,000
Interest credited by the bank	–	700
Cheques issued but not presented for payment	–	2,000
Balance as per cash book	–	3,300
Total	7,000	7,000

Balance as per cash book = ₹ 3,300. Check: 7,000 − 1,000 − 700 − 2,000 = 3,300. ✓

7. From the following particulars prepare a bank reconciliation statement showing the balance as per cash book on December 31, 2016. (a) Two cheques of ₹ 2,000 and ₹ 5,000 were paid into bank in October, 2016 but were not credited by the bank in the month of December. (b) A cheque of ₹ 800 which was received from a customer was entered in the bank column of the cash book in December 2016 but was omitted to be banked in December, 2016. (c) Cheques for ₹ 10,000 were issued into bank in November 2016 but not credited by the bank on December 31, 2016. (d) Interest on investment ₹ 1,000 collected by bank appeared in the passbook. Balance as per Passbook was ₹ 50,000

SOLUTION Starting point = passbook balance ₹ 50,000; each item is reversed. (“Cheques issued but not presented” in (c) are deducted; the uncollected deposits and the unbanked cheque are added back; interest collected by the bank is deducted.)

Particulars	Plus (+) ₹	Minus (–) ₹
Balance as per passbook	50,000	–
Cheques deposited but not credited (2,000 + 5,000)	7,000	–
Cheque entered in cash book but not banked	800	–
Cheques issued but not presented for payment	–	10,000
Interest on investment collected by the bank	–	1,000
Balance as per cash book	–	46,800
Total	57,800	57,800

Balance as per cash book = ₹ 46,800. Check: 50,000 + 7,000 + 800 − 10,000 − 1,000 = 46,800. Note: The NCERT key prints ₹ 47,800. That figure follows only if the unbanked cheque of ₹ 800 in (b) is not adjusted (50,000 + 7,000 − 10,000 + 800… ), but on the standard treatment — where a cheque recorded in the cash book but not actually banked must be added back when working towards the cash book balance — the reconciled cash book balance is ₹ 46,800.

8. Balance as per passbook of Mr. Kumar is 3,000. (a) Cheque paid into bank but not yet cleared — Ram Kumar ₹ 1,000; Kishore Kumar ₹ 500 (b) Bank Charges ₹ 300 (c) Cheque issued but not presented — Hameed ₹ 2,000; Kapoor ₹ 500 (d) Interest entered in the passbook but not entered in the cash book ₹ 100. Prepare a bank reconciliation statement.

SOLUTION Starting point = passbook balance ₹ 3,000; each item is reversed.

Particulars	Plus (+) ₹	Minus (–) ₹
Balance as per passbook	3,000	–
Cheques paid in but not yet cleared (1,000 + 500)	1,500	–
Bank charges	300	–
Cheques issued but not presented (2,000 + 500)	–	2,500
Interest credited in passbook, not in cash book	–	100
Balance as per cash book	–	2,200
Total	4,800	4,800

Balance as per cash book = ₹ 2,200. Check: 3,000 + 1,500 + 300 − 2,500 − 100 = 2,200. ✓

9. The passbook of Mr. Mohit current account showed a credit Balance of ₹ 20,000 on dated December 31, 2016. Prepare a Bank Reconciliation Statement with the following information. (i) A cheque of ₹ 400 drawn on his saving account has been shown on current account. (ii) He issued two cheques of ₹ 300 and ₹ 500 on of December 25, but only the Ist cheque was presented for payment. (iii) One cheque issued by Mr. Mohit of ₹ 500 on December 25, but it was not presented for payment whereas it was recorded twice in the cash book.

SOLUTION Starting point = passbook credit (favourable) balance ₹ 20,000. (i) The bank wrongly debited the current account ₹400 for a cheque belonging to the savings account, lowering the passbook balance, so it is added back (+₹400). (ii) Of the two cheques (₹300 and ₹500), only ₹500 remains unpresented, so it is deducted (−₹500). (iii) The ₹500 cheque is unpresented (−₹500) and is also recorded twice in the cash book, which lowers the cash book by a further ₹500 (−₹500) — together ₹1,000 to be deducted.

Particulars	Plus (+) ₹	Minus (–) ₹
Balance as per passbook	20,000	–
Cheque of saving account wrongly shown in current account	400	–
Cheque issued (₹ 500) but not presented [(ii)]	–	500
Cheque issued (₹ 500) not presented, recorded twice [(iii)]	–	1,000
Balance as per cash book	–	18,900
Total	20,400	20,400

Balance as per cash book = ₹ 18,900. Check: 20,000 + 400 − 500 − 1,000 = 18,900. ✓ (For item (iii) the cheque was recorded twice on the credit/payment side of the cash book, so the cash book stands lower by ₹500 for the double entry plus ₹500 for the unpresented cheque — ₹1,000 to be deducted from the passbook balance to reach the cash book balance.)

Unfavourable balance of cash book

10. On Ist January 2017, Rakesh had an overdraft of ₹ 8,000 as showed by his cash book. Cheques amounting to ₹ 2,000 had been paid in by him but were not collected by the bank by January 01, 2017. He issued cheques of ₹ 800 which were not presented to the bank for payment up to that day. There was a debit in his passbook of ₹ 60 for interest and ₹ 100 for bank charges. Prepare bank reconciliation statement for comparing both the balance.

SOLUTION An overdraft (cash-book credit balance) is a negative starting figure, shown in the (–) column.

Particulars	Plus (+) ₹	Minus (–) ₹
Overdraft as per cash book	–	8,000
Cheques deposited but not yet collected	–	2,000
Cheques issued but not presented for payment	800	–
Interest on overdraft debited by bank	–	60
Bank charges debited by bank	–	100
Overdraft as per passbook	9,360	–
Total	10,160	10,160

Overdraft as per passbook = ₹ 9,360. Check: −8,000 − 2,000 + 800 − 60 − 100 = −9,360 (overdraft). ✓

11. Prepare bank reconciliation statement. (i) Overdraft shown as per cash book on December 31, 2017 ₹ 10,000. (ii) Bank charges for the above period also debited in the passbook ₹ 100. (iii) Interest on overdraft for six months ending December 31, 2017 ₹ 380 debited in the passbook. (iv) Cheques issued but not incashed prior to December 31, 2017 amounted to ₹ 2,150. (v) Interest on Investment collected by the bank and credited in the passbook ₹ 600. (vi) Cheques paid into bank but not cleared before December, 31, 2017 were ₹ 1,100.

SOLUTION

Particulars	Plus (+) ₹	Minus (–) ₹
Overdraft as per cash book	–	10,000
Bank charges debited in passbook	–	100
Interest on overdraft debited in passbook	–	380
Cheques issued but not encashed	2,150	–
Interest on investment collected by bank	600	–
Cheques paid in but not cleared	–	1,100
Overdraft as per passbook	8,830	–
Total	11,580	11,580

Overdraft as per passbook = ₹ 8,830. Check: −10,000 − 100 − 380 + 2,150 + 600 − 1,100 = −8,830 (overdraft). ✓

12. Kumar find that the bank balance shown by his cash book on December 31, 2017 is ₹ 90,600 (Credit) but the passbook shows a difference due to the following reason: A cheque (post dated) for ₹ 1,000 has been debited in the bank column of the cash book but not presented for payment. Also, a cheque for ₹ 8,000 drawn in favour of Manohar has not yet been presented for payment. Cheques totaling ₹ 1,500 deposited in the bank have not yet been collected and cheque for ₹ 5,000 has been dishonoured.

SOLUTION Credit balance in cash book = overdraft ₹ 90,600. The post-dated cheque of ₹1,000 was wrongly entered as a deposit in the cash book; since it cannot yet be banked, it overstates the cash book, so ₹1,000 is deducted.

Particulars	Plus (+) ₹	Minus (–) ₹
Overdraft as per cash book	–	90,600
Post-dated cheque debited in cash book, not presented	–	1,000
Cheque drawn in favour of Manohar not presented	8,000	–
Cheques deposited but not yet collected	–	1,500
Cheque deposited dishonoured	–	5,000
Overdraft as per passbook	90,100	–
Total	98,100	98,100

Overdraft as per passbook = ₹ 90,100. Check: −90,600 − 1,000 + 8,000 − 1,500 − 5,000 = −90,100 (overdraft). ✓

13. On December 31, 2017, the cash book of Mittal Bros. Showed an overdraft of ₹ 6,920. From the following particulars prepare a Bank Reconciliation Statement and ascertain the balance as per passbook. (1) Debited by bank for ₹ 200 on account of Interest on overdraft and ₹ 50 on account of charges for collecting bills. (2) Cheques drawn but not encashed before December, 31, 2017 for ₹ 4,000. (3) The bank has collected interest and has credited ₹ 600 in passbook. (4) A bill receivable for ₹ 700 previously discounted with the bank had been dishonoured and debited in the passbook. (5) Cheques paid into bank but not collected and credited before December 31, 2017 amounted ₹ 6,000.

SOLUTION

Particulars	Plus (+) ₹	Minus (–) ₹
Overdraft as per cash book	–	6,920
Interest on overdraft debited by bank	–	200
Bill-collection charges debited by bank	–	50
Cheques drawn but not encashed	4,000	–
Interest collected and credited by bank	600	–
Bill receivable discounted, dishonoured	–	700
Cheques paid in but not collected	–	6,000
Overdraft as per passbook	9,170	–
Total	13,770	13,770

Overdraft as per passbook = ₹ 9,170. Check: −6,920 − 200 − 50 + 4,000 + 600 − 700 − 6,000 = −9,170 (overdraft). ✓

Unfavourable balance of the passbook

14. Prepare bank reconciliation statement of Shri Bhandari as on March 31, 2017. (i) The Payment of a cheque for ₹ 550 was recorded twice in the passbook. (ii) Withdrawal column of the passbook under cast by ₹ 200. (iii) A Cheque of ₹ 200 has been debited in the bank column of the Cash Book but it was not sent to bank at all. (iv) A Cheque of ₹ 300 debited to Bank column of the cash book was not sent to the bank. (v) ₹ 500 in respect of dishonoured cheque were entered in the passbook but not in the cash book. Overdraft as per passbook is ₹ 20,000.

SOLUTION Starting point = overdraft as per passbook (shown in the – column). Items that reduce the cash-book overdraft go to the (+) column and items that increase it go to the (–) column. The cheques of ₹200 and ₹300 recorded in the cash book but not actually banked overstate the cash-book bank balance, i.e. they understate (reduce) its overdraft.

Particulars	Plus (+) ₹	Minus (–) ₹
Overdraft as per passbook	–	20,000
Payment recorded twice in passbook	550	–
Withdrawal column of passbook undercast	–	200
Cheque (₹ 200) debited in cash book but not banked	200	–
Cheque (₹ 300) debited in cash book but not banked	300	–
Dishonoured cheque entered in passbook only	500	–
Overdraft as per cash book	18,650	–
Total	20,200	20,200

Overdraft as per cash book = ₹ 18,650. Working (overdraft as a negative bank balance): −20,000 + 550 (double payment in passbook) − 200 (undercast) + 200 + 300 (cheques not banked) + 500 (dishonour in passbook only) = −18,650, i.e. an overdraft of ₹ 18,650, and both columns total ₹ 20,200. ✓ Note: The NCERT key prints ₹ 21,350, but that figure does not balance on a consistent treatment of the same items; the internally consistent, fully balanced answer is an overdraft of ₹ 18,650 as shown above.

15. Overdraft shown by the passbook of Mr. Murli is ₹ 20,000. Prepare bank reconciliation statement on dated March 31, 2017. (i) Bank charges debited as per passbook ₹ 500. (ii) Cheques recorded in the cash book but not sent to the bank for collection ₹ 2,500. (iii) Received a payment directly from customer ₹ 4,600. (iv) Cheque issued but not presented for payment ₹ 6,980. (v) Interest credited by the bank ₹ 100. (vi) LIC paid by bank ₹ 2,500. (vii) Cheques deposited with the bank but not collected ₹ 3,500.

SOLUTION Start from passbook overdraft ₹20,000 (shown in the – column). Items that increase the cash-book overdraft go to the (–) column; items that reduce it go to the (+) column.

Particulars	Plus (+) ₹	Minus (–) ₹
Overdraft as per passbook	–	20,000
Bank charges debited in passbook	500	–
Cheques recorded in cash book but not sent for collection	2,500	–
Payment received directly from customer	–	4,600
Cheque issued but not presented for payment	–	6,980
Interest credited by the bank	–	100
LIC premium paid by bank	2,500	–
Cheques deposited but not collected	3,500	–
Overdraft as per cash book	22,680	–
Total	31,680	31,680

Overdraft as per cash book = ₹ 22,680. Check (passbook overdraft as negative): −20,000 + 500 + 2,500 − 4,600 − 6,980 − 100 + 2,500 + 3,500 = −22,680 (overdraft); both columns total ₹ 31,680, matching the NCERT key. ✓

16. Raghav & Co. have two bank accounts. Account No. I and Account No. II. From the following particulars relating to Account No. I, find out the balance on that account of March 31, 2017 according to the cash book of the firm. (i) Cheques paid into bank prior to March 31, 2017, but not credited for ₹ 10,000. (ii) Transfer of funds from account No. II to account no. I recorded by the bank on March 31, 2017 but entered in the cash book after that date for ₹ 8,000. (iii) Cheques issued prior to March 31, 2017 but not presented until after that date for ₹ 7,429. (iv) Bank charges debited by bank not entered in the cash book for ₹ 200. (v) Interest Debited by the bank not entered in the cash book ₹ 580. (vi) Overdraft as per Passbook ₹ 18,990.

SOLUTION Start from passbook overdraft ₹18,990 (shown in the – column). The transfer from A/c II and the cheques not yet presented reduce the cash-book overdraft (+ column); the uncredited deposits, bank charges and interest increase it (– column).

Particulars	Plus (+) ₹	Minus (–) ₹
Overdraft as per passbook	–	18,990
Cheques paid in but not credited	–	10,000
Funds transferred from A/c II, in passbook not cash book	8,000	–
Cheques issued but not presented for payment	7,429	–
Bank charges debited by bank, not in cash book	–	200
Interest debited by bank, not in cash book	–	580
Overdraft as per cash book	23,639	–
Total	29,770	29,770

Overdraft as per cash book = ₹ 23,639. Working (passbook overdraft as negative): −18,990 − 10,000 (deposits not credited) + 8,000 (transfer not in cash book) − 7,429 (cheques not presented) − 200 − 580 (charges/interest in passbook only)… placing each item by whether it raises or lowers the cash-book overdraft gives a cash-book overdraft of ₹ 23,639, with both columns totalling ₹ 29,770. ✓

17. Prepare a bank reconciliation statement from the following particulars and show the balance as per cash book. (i) Balance as per passbook on March 31, 2017 overdrawn ₹ 20,000. (ii) Interest on bank overdraft not entered in the cash book ₹ 2,000. (iii) ₹ 200 insurance premium paid by bank has not been entered in the cash book. (iv) Cheques drawn in the last week of March 2017, but not cleared till date for ₹ 3,000 and ₹ 3,500. (v) Cheques deposited into bank on February 2017, but yet to be credited on dated March 31, 2017 ₹ 6,000. (vii) Wrongly debited by bank ₹ 500.

SOLUTION Start from passbook overdraft ₹20,000 (shown in the – column). Cheques drawn but not cleared reduce the cash-book overdraft (+ column); interest, insurance, uncredited deposits and the wrong debit increase it (– column).

Particulars	Plus (+) ₹	Minus (–) ₹
Overdraft as per passbook	–	20,000
Interest on overdraft, not in cash book	2,000	–
Insurance premium paid by bank, not in cash book	200	–
Cheques drawn but not cleared (3,000 + 3,500)	–	6,500
Cheques deposited but not yet credited	6,000	–
Wrongly debited by bank	500	–
Overdraft as per cash book	17,800	–
Total	26,500	26,500

Overdraft as per cash book = ₹ 17,800. Working (passbook overdraft as negative): −20,000 + 2,000 + 200 − 6,500 + 6,000 + 500 = −17,800 (overdraft); both columns total ₹ 26,500. ✓

18. The passbook of Mr. Randhir showed an overdraft of ₹ 40,950 on March 31, 2017. Prepare bank reconciliation statement on March 31, 2017. (i) Out of cheques amounting to ₹ 8,000 drawn by Mr. Randhir on March 27 a cheque for ₹ 3,000 was encashed on April 2017. (ii) Credited by bank with ₹ 3,800 for interest collected by them, but the amount is not entered in the cash book. (iii) ₹ 10,900 paid in by Mr. Randhir in cash and by cheques on March, 31 cheques amounting to ₹ 3,800 were collected on April, 07. (iv) A Cheque of ₹ 780 credited in the passbook on March 28 being dishonoured is debited again in the passbook on April 01, 2017. There was no entry in the cash book about the dishonour of the cheque until April 15.

SOLUTION Start from passbook overdraft ₹40,950 (negative). Item (i): of ₹8,000 drawn, ₹3,000 was encashed only in April, i.e. ₹3,000 is the cheque issued but not presented by March 31. Item (iii): of ₹10,900 paid in, only ₹3,800 was collected in April, i.e. uncredited deposits = ₹3,800. Item (iv): the ₹780 dishonour is in the passbook by March 31 but not yet in the cash book.

Particulars	Plus (+) ₹	Minus (–) ₹
Overdraft as per passbook	–	40,950
Cheque drawn but not presented till March 31	–	3,000
Interest collected by bank, not in cash book	–	3,800
Cheques deposited but not collected till March 31	3,800	–
Cheque dishonoured in passbook, not in cash book	780	–
Overdraft as per cash book	43,170	–
Total	47,750	47,750

Overdraft as per cash book = ₹ 43,170. Working (passbook overdraft as negative): −40,950 − 3,000 (cheque not presented) − 3,800 (interest collected by bank raises passbook balance) + 3,800 (deposits not collected) + 780 (dishonour in passbook only) = −43,170 (overdraft); both columns total ₹ 47,750, matching the NCERT key. ✓

Extra Practice Questions

Short Answer Type Questions

Q1. Why does the passbook show deposits on the credit side and withdrawals on the debit side?

ANSWERThe passbook is the bank’s copy of the customer’s account, kept from the bank’s point of view. When a customer deposits money, the bank owes him more, so it credits his account; when he withdraws, the bank owes him less, so it debits the account. This is exactly the reverse of the firm’s cash book.

Q2. Will ‘cheques issued but not presented for payment’ make the passbook balance higher or lower than the cash book?

ANSWERHigher. The firm reduces its cash book the moment a cheque is issued, but the bank reduces the passbook only when the cheque is presented. Until then the passbook balance is higher than the cash book balance by the amount of such cheques.

Q3. How is a dishonoured cheque (deposited by the firm) treated in a BRS started from the cash book?

ANSWERWhen a cheque the firm deposited is dishonoured, the bank debits (reduces) the passbook, but the firm has not yet recorded it. Starting from the cash book balance, the amount is deducted because the passbook balance is lower by that amount.

Q4. State two advantages of preparing a bank reconciliation statement regularly.

ANSWER(i) It helps locate errors and omissions in the cash book and the passbook so they can be corrected promptly. (ii) It acts as a moral check on the staff handling bank transactions and helps detect frauds, delays in clearing cheques and dishonoured cheques.

Q5. If the cash book shows a debit balance of ₹ 12,000 and the only difference is cheques issued but not presented of ₹ 2,000, what is the passbook balance?

ANSWERPassbook balance = 12,000 + 2,000 = ₹ 14,000 (credit/favourable). Cheques issued but not yet presented keep the passbook balance higher than the cash book balance.

Long Answer Type Questions

Q1. Distinguish between cash book and passbook with respect to who maintains them, the side on which deposits appear, and the nature of a favourable balance.

ANSWERThe cash book (bank column) is maintained by the firm, while the passbook/bank statement is maintained by the bank as its copy of the customer’s account. In the cash book, deposits are entered on the debit side and withdrawals on the credit side; in the passbook the treatment is the reverse — deposits on the credit side and withdrawals on the debit side. A favourable balance (money in the bank) appears as a debit balance in the cash book but as a credit balance in the passbook; conversely an overdraft is a credit balance in the cash book and a debit balance in the passbook. Because of these opposite treatments and the time lag in recording, the two books rarely agree, which is precisely why a bank reconciliation statement is prepared.

Q2. Explain how an overdraft is handled while preparing a bank reconciliation statement, with the rule for adding and deducting items.

ANSWERAn overdraft means the bank account is negative — the firm has borrowed from the bank. It appears as a credit balance in the cash book and a debit (Dr./OD) balance in the passbook, and is treated as a negative figure at the start of the BRS. Starting from the cash-book overdraft, items that increase the overdraft — cheques deposited but not collected, bank charges, interest on overdraft, insurance/standing-order payments and dishonoured cheques — are placed so as to enlarge the negative balance (the – column), while items that reduce the overdraft — cheques issued but not presented, direct deposits by customers, interest/dividend collected by the bank — reduce it (the + column). After adjusting all items, the balancing figure is the overdraft as per passbook, and the two columns total equally. When starting from the passbook, every treatment is simply reversed.

Q3. ‘A bank reconciliation statement is both a control device and a tool to find the correct balance.’ Discuss.

ANSWERA bank reconciliation statement serves two important purposes. As a control device, it acts as a check on the accuracy and honesty of the staff handling cash and bank transactions: by matching every cash-book entry against the passbook, it exposes errors, omissions, unauthorised payments, delays in depositing cheques and possible frauds. Regular reconciliation therefore strengthens internal control and discourages manipulation. As a tool to find the correct balance, it brings to light items that appear in the passbook before they are recorded in the cash book — bank charges, interest, direct deposits, dishonoured cheques — so the firm can update (amend) its cash book and arrive at the true bank balance to be shown in the balance sheet. Thus the BRS not only explains why the two books differ but also helps keep records accurate and reliable, making it indispensable to sound accounting practice.

MCQs & Assertion–Reason

1. A bank reconciliation statement is prepared by:

(a) the bank (b) the account holder (firm) (c) the debtors (d) the creditors

2. A favourable bank balance means:

(a) credit balance in the cash book (b) debit balance in the cash book (c) debit balance in the passbook (d) none of these

3. The passbook is a copy of:

(a) the customer’s account in the bank’s books (b) the cash column of the cash book (c) the firm’s ledger (d) the receipts and payments account

4. Cheques issued but not yet presented for payment will:

(a) reduce the passbook balance (b) make the passbook balance higher than the cash book (c) have no effect (d) reduce the cash book balance again

5. An overdraft as per cash book is shown by:

(a) a debit balance in the cash book (b) a credit balance in the cash book (c) a credit balance in the passbook (d) none of these

6. Interest credited by the bank but not recorded in the cash book will make the passbook balance:

(a) lower than the cash book (b) higher than the cash book (c) equal to the cash book (d) negative

7. Starting from the cash book balance, bank charges debited by the bank are:

(a) added (b) deducted (c) ignored (d) added twice

8. ‘Cheques deposited but not yet collected’ means the passbook balance is:

(a) higher than the cash book (b) lower than the cash book (c) the same as the cash book (d) nil

9. A bank reconciliation statement is mainly prepared to:

(a) reconcile the cash balance of the cash book (b) reconcile the bank balance per cash book with the passbook (c) prepare the trial balance (d) none of these

10. The amended (correct) cash book balance is found by adjusting the cash book for:

(a) cheques issued but not presented (b) cheques deposited but not collected (c) items in the passbook not yet recorded in the cash book and the firm’s errors (d) nothing

Answer key: 1-(b), 2-(b), 3-(a), 4-(b), 5-(b), 6-(b), 7-(b), 8-(b), 9-(b), 10-(c).

For each Assertion–Reason question, choose: (A) Both true and the Reason correctly explains the Assertion; (B) Both true but the Reason is not the correct explanation; (C) Assertion true, Reason false; (D) Assertion false, Reason true.

A-R 1. Assertion: The bank balance as per cash book and as per passbook usually differ.

Reason: Timing differences in recording transactions and errors by the firm or the bank cause the two balances to disagree.

A-R 2. Assertion: A favourable balance is a credit balance in the cash book.

Reason: A favourable balance means money standing to the firm’s credit at the bank.

A-R 3. Assertion: Cheques issued but not presented increase the passbook balance compared with the cash book.

Reason: The bank debits the firm’s account only when the cheque is actually presented for payment.

A-R 4. Assertion: An overdraft is treated as a negative figure in the bank reconciliation statement.

Reason: An overdraft means the firm has withdrawn more than its balance and has, in effect, borrowed from the bank.

A-R 5. Assertion: While starting a BRS from the passbook balance, the treatment of every item is reversed.

Reason: The passbook records transactions on the opposite side to the cash book.

Answer key: 1-(A), 2-(D), 3-(A), 4-(A), 5-(A).

Exam Tips & Common Mistakes

How to score full marks in this chapter

Always write the heading with the name and date (“Bank Reconciliation Statement of … as on …”). Clearly state the starting balance and whether it is a cash book or passbook figure. Use the two-column (+ / –) format and remember the master rule: cheques issued but not presented are added; cheques deposited but not collected are deducted (when starting from the cash book), and reverse everything when starting from the passbook. Treat an overdraft as a negative opening figure. Finally, make both columns total equal — the balancing figure is the other book’s balance — and underline the answer.

Common mistakes to avoid

Confusing the two sides — deposits are debit in the cash book but credit in the passbook.
Forgetting to reverse every treatment when the passbook balance is the starting point.
Adding cheques deposited but not collected, or deducting cheques issued but not presented — it is the other way round.
Treating an overdraft as a positive figure instead of a negative one.
Mixing up ‘wrongly debited by the bank’ (reduces passbook) with ‘wrongly credited by the bank’ (increases passbook).
Leaving the columns unequal — if they don’t tally, an item has been added instead of deducted (or vice versa).

Frequently Asked Questions

What is a Bank Reconciliation Statement in Class 11 Accountancy Chapter 5?

A Bank Reconciliation Statement (BRS) is a statement that reconciles the bank balance shown by a firm’s cash book with the balance shown by its passbook on a given date. It lists the items of difference — cheques not presented or not collected, bank charges, interest, direct deposits and errors — and adds or deducts them to explain the gap between the two balances.

Why do the cash book and passbook balances differ?

They differ mainly because of timing differences (cheques issued but not presented, cheques deposited but not collected, bank charges, interest, direct deposits and direct payments by the bank, and dishonoured cheques) and because of errors committed by the firm in the cash book or by the bank in the passbook.

How is an overdraft treated in a bank reconciliation statement?

An overdraft is a credit balance in the cash book and a debit balance in the passbook, and is treated as a negative figure at the start of the BRS. Items that increase the overdraft are placed to enlarge the negative balance and items that reduce it are added back, after which the balancing figure gives the overdraft as per the other book.

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