Based on ISTD Assignment Solution and others
Answer:
After getting Bank Statement / Pass Book, businessmen, compares entries in Cash Book (recorded by trader) and Bank Statement (recorded by bank in relation to businessmen) and prepare Bank Reconciliation. While preparing reconciliation statement, numbers of entries are not matching with each other these discrepancies may lead to notice frauds, errors, misappropriation of cash, by cashier. It reduces the charges of misappropriation by the employees, so timely action may be taken. At the same time, it is possible that Bank might have made wrong entry of deposit or withdrawal, businessmen can be inform bank to correct it.
It presents sinereo, of e-banking of increasing use of credit card / debit card facilities / Net banking. Their may be number of transaction are not recorded in time which can be brought to notice. For wrong entry by bank, immediate action can be taken, asking bank to verify the mistake(s).
CHECK YOUR PROGRESS
- Give the examples of various transactions which are generally entered first in the Pass Book.
- If the Bank balance as per Cash Book is given, how the following transactions affect:
- Interest allowed or collected by Bank, Sale of Investments recorded in Pass Book only.
- Cheque paid into Bank but not credited by Bank.
- Payments by bank for insurance premium, club subscription, Purchase of Securities etc. are recorded in Pass Book only.
- Direct payment into bank by our customer.
- Bank Charges, Interest charged by Bank or dishonour of cheque etc. are recorded in Pass Book only.
