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Bank Reconciliation Statement — Account STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceAccountBank Reconciliation Statement4 Marks
Question
After completing his $12^{th}$ class with commerce stream, Raman started to assist his father in their family business named, Raman Sons.. One day while going through the Cash Book of Raman Sons, he found that the cash book showed a balance of $Rs. 2,500$ at Bank as on $31^{st}$ December, $2021.$ He recalled the topic of Bank reconciliation statement studied by him during his $11^{th}$ standard in Accountancy subject. Thus, he tried to tally the balance of Cash book with Pass book. He found out that there is some mismatch, so he enquired and found that they sent cheques amounting to $Rs. 13,500$ for collection before $31^{st}$ December, but it seems from Pass Book that cheques for $Rs. 8,500$ had been credited by this date. Similarly, they issued cheques for $Rs. 9,800$ in the month of December, but cheques for $Rs. 1,350$ were presented in January, $2022.$
The pass book also revealed that bank collected dividend on securities $Rs. 1,000$ as per standing instruction. Bank also charged $Rs. 210 $ as incidental charges. Both of these entries were not passed in the Cash Book. So, he tried to prepare a
Bank Reconciliation Statement to reconcile the balance of cash book with the balance of pass book.
$1.$ When Bank Reconciliation Statement is prepared with debit balance as per Cash Book, the Balance derived will be
$A.$ Credit Balance as per Pass Book
$B.$ Debit Balance as per Cash Book
$C.$ Debit Balance as per Pass Book
$D.$ Either $(A)$ or $(C)$
$2.$ In Bank Reconciliation Statement, Cheques issued but not presented for payment in December would amount to:
$A.$ Plus $Rs. 8,450$
$B.$ Minus $Rs. 1,350$
$C.$ Plus $Rs. 1,350$
$D.$ Minus$ Rs. 8,450$
$3.$ In Bank Reconciliation Statement, dividend collected by the bank on securities will be recorded as:
$A.$ Plus $Rs. 1,000$
$B.$ Minus $Rs. 1,000$
$C.$ Will not be recorded
$D.$ Both $A$ and $B$
$4.$ In Bank Reconciliation Statement, Cheques deposited but not yet cleared would be recorded as:
$A.$ Plus $Rs. 5,000$
$B.$ Minus $Rs. 5,000$
$C.$ Plus $Rs. 8,500$
$D.$ Minus $Rs. 8,500$
✓

Answer

$(i) D (ii) C (iii) A (iv) B$

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Mr. Shyam is a well-known industrialist. He purchased a machinery for $₹ 95,000$ on $1^{st} $ October, $2016.$ He spent $₹ 5,000$ on its installation. The firm follows calendar year and depreciation is charged $@ 10\%$ p.a. as per Straight Line Method. He decided to sell the machinery on $1^{st} $ April $2019.$ There are two parties who want to purchase his machinery, $1^{st} $ party wants to purchase the machinery for $72,000,$ and $2^{nd}$ party wants to purchase it for $₹ 76,000.$ On the basis of above information answer the following questions:
$1.$ What is the cost of machinery?
$a) \ ₹ 95,000$
$b) \ ₹ 1,00,000$
$c) \ ₹ 90,000$
$d)$ None of the above
$2.$ What will be the Book Value of machinery on the date of sale?
$a) \ ₹ 80,000$
$b) \ ₹ 70,000$
$c) \ ₹ 75,000$
$d) \ ₹ 1,00,000$
$3$. Profit or loss on sale of machinery in case of $1^{st}$ party:
$a) \ ₹ 3,000$ loss
$b) \ ₹ 3,000$ profit
Page $42$ of $42$
$c) \ ₹ 5,000$ loss
$d)$ None of the above
$4.$ Profit or loss on sale of machinery in case of $2^{nd}$ party:
$a) \ ₹ 1,000$ profit
$b) \ ₹ 1,000$ loss
$c) \ ₹ 2,000$ profit
$d)$ None of the above
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Arya Ltd. has a manufacturing plant in Delhi. On 1st July, 2021, Arya Ltd purchased a machine for Rs 1,08,000 and spent Rs 12,000 on its installation. At the time of purchase, it was estimated that the effective commercial life of the machine will be 12 years after which its salvage value will be Rs 12,000. The machinery is such that the possibility of obsolescence is low and do not require much repair expenses with passage of time. The accounts are closed on 31st December every year.
1. Why should depreciation be charged on the manufacturing plant of Arya Ltd?
(a) For matching of costs and revenue.
(b) To comply with law.
(c) To reflect true and fair financial position.
(d) All of the above
2. Which of the following accounting standard should be followed by Arya Ltd. to charge depreciation?
(a) Accounting Standard-7
(b) Accounting Standard-6
(c) Accounting Standard-8
(d) Accounting Standard-9
3. Which of the following method should be used by Arya Ltd. to charge depreciation?
(a) Written down value method
(b) Straight line method
(c) Insurance policy method
(d) None of the above
4. What is the original cost of the asset on which depreciation is to be charged?
(a) Rs1,08,000
(b) Rs12,000
(c) Rs1,20,000
(d) None of these
5. What is the amount of depreciation charged in the first year?
(a) Rs9,000
(b) Rs10,000
(c) Rs4,500
(d) Rs5,000
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Prepare a Trial Balance from the following information:

 Rs.
Prepaid expenses5,000
Outstanding rent2,000
Bad debts recovered4,000
Interest on Investment1,000
Creditor5,000
Bank overdraft2,000
Discount allowed800
Due from Debtor1,200
Investment15,000
Patents4,000
Machinery6,000
Capital18,000

Gurmeet has already prepared his trial balance, when he was goingthough the books of accounts he could identify an error. Wages paidfor installation of new machinery Rs6000 has been debited to WagesAccount.
Q1.What type of error it is ?
(a)Error of Principle
(b)Error of commission
(c)Error of commission
(d)Compensating error

Q2.Will such error affect the trial balance?
(a)Yes
(b)No
(c)Either yes or no
(d)Neither yes nor no

Q3.How such errors will be rectified ?
(a)Machinery A/c Dr 6000To wages A/c 6000
(b) wages A/c Dr 6000To cash 6000
(c) Wages A/c Dr 6000To Machinery A/c 6000
(d) Machinery A/c Dr 6000To Suspense A/c 6000

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There are two dentists Dr Sharma and Dr Mehta in your locality who are competitors. Both of them have recently bought an equipment for treatment of patients. They purchased the equipment for ₹ 1,00,000. Dr Sharma has also paid cartage of ₹ 4,000 and spent ₹ 1,000 on its installation. Dr Sharma has decided to write off an equal amount of depreciation every year @ 10% p.a., while Dr Mehta wants to write of a larger amount in earlier years @ 10% p.a.. They have no knowledge about methods of depreciation. On the basis of above information answer the following questions:
1. What is the total cost of equipment for Dr Sharma?
a) ₹ 1,00,000
b) ₹ 1,05,000
c) ₹ 1,04,000
d) ₹ 1,01,000
2. Name the methods which is being followed Dr Mehta?
a) Straight Line Method
b) Written - Down Value Method
c) None of the above
d) Both (a) and (b)
3. Dr Mehta has wisely selected written down value method, reason is –
a) WDV method is recognised by Income tax Laws
b) WDV method helps in recovering the cost of equipment in the initial years
c) Both (a) and (b)
d) None of the above
4. What amount of depreciation Dr Mehta will charge on his equipment in third financial year:
a) ₹ 10,000
b) ₹ 9,000
c) ₹ 8,100
d) ₹ 10,500
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WHERE Ltd. is a manufacturing firm and has a machinery worth Rs 50,00,000. As on 1st April, 2018 the provision for depreciation stood at Rs 50,00,000. WHERE Ltd. charges depreciation on machinery at 20% p.a. by the diminishing balance method. A piece of machinery purchased on 1st April, 2016 for Rs 10,00,000 was sold on 1st October, 2018 for Rs 6,00,000.
1. Under written down value method, a fixed and equal amount in the form of depreciation is charged every year during the life time of the asset.
(a) True
(b) False
(c) Can't say
(d) Partially true
2. Which of the following is the probable reason for WHERE Ltd's adoption of written down value method for charging depreciation?
(a) The machinery is such that its repair charges are low
(b) The possibility of obsolescence of machinery is low
(c) The machinery is such that it is affected by technological changes and require more repair expenses with passage of time
(d) None of the above
3. What is the total depreciation charged on the machinery sold?
(a) Rs4,24,000
(b) Rs3,60,000
(c) Rs4,40,000
(d) None of these
4. What is the written down value of the machinery sold?
(a) Rs5,76,000
(b) Rs10,00,000
(c) Rs6,40,000
(d) None of these
5. What is the balance carried down in the machinery account?
(a) Rs50,00,000
(b) Rs40,00,000
(c) Rs44,24,000
(d) None of these
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Mr. A of Baroda purchased goods of Rs. 50,000 from Mr. B of Surat and Rs. 1,20,000 From Mr. X of Jaipur. Mr.A sold goods costing of 1,30,000 to a businessman in Gujarat for Rs. 1,50,000. Rate of IGST is 10%, Rate of SGST is 5% and Rate of CGST is 5%.
1. Amount of IGST charged by Mr. A.
(A) 12000
(B) 17000
(C) Nil
(D) 13000
2. Amount of IGST charged by Mr. X.
(A) 22000
(B) 17000
(C) 3000
(D) 12000
3. Amount of SGST charged by Mr. A.
(A) 15000
(B) 9000
(C) 7500
(D) 6500
4. Amount of CGST charged by Mr. A.
(A) 7500
(B) 6500
(C) 15000
(D) 13000
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Following are the transactions of Mr. Saurav, Delhi:

  • He started his business with Cash Rs.10,000; Bank Rs.5,000; Machinery Rs.50,000 and Stock Rs.5,000.
  • Stock of Rs.500 lost by fire.
  • Cash Sales Rs. 2,000
  • Purchase of Furniture by cheque Rs.2,000

Mr. Saurav maintains Principal as well as subsidiaries books of accounts including Cash Book, Purchase Book, Sales Book, Purchase Return Book, Sales Return Book and Journal Proper.
Answer the following questions from the above case:
1. Mr. Sourav started business with Machinery, where the transaction of machinery recorded.
(A) Cash Book
(B) Journal Proper
(C) Purchase Book
(D) Sales Book
2. He Purchase furniture by cheque, where it will be recorded in:
(A) Journal Proper
(B) cheque Book
(C) Purchase Book
(D) Cash Book
3. Mr. Saurav has no need to prepare two accounts if he maintains double column Cash Book. Which two accounts he has no need to prepare _______.
(A) Cash, Bank
(B) Bank, Cheque in hand
(C) Bank Overdraft, Bank
(D) Machinery
4. In which side of Cash Book does Cash Sales recorded:
(A) Credit
(B) Debit
(C) Not recorded in Cash Book
(D) None of these

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Sujan initiated her startup Ishika Ltd. in $2018$. On $31^{st}$ March$, 2022,$ She was going through her Cash book and Pass Book. She found out that the pass book showed a debit balance of $Rs.\ 7,500$ which was different from her cash book Bank column balance. So, she decided to prepare a Bank Reconciliation statement to reconcile both the balances from the following particula $Rs :$
  1. Cheques paid in for collection amounted to $Rs. \ 20,600$ but cheques of $Rs.\ 7,800$ were credited on $3{rd}$ April$, 2022.$
  2. A cheque for $Rs. \ 1,000$ debited in the cash book was omitted to be banked.
  3. Cheques amounting to $Rs\ . 7,800$ were drawn on $27^{th}$ March, of which cheques of $Rs. \ 2,400$ were cashed upto $31^{st}$ march$, 2022.$
  4. A cheque of $Rs.\ 800$ was banked and credited, but omitted to be recorded in the Cash Book.
  5. Bank charged interest on overdraft $Rs, \ 650.$
Based on above information you are required to answer the following questions.
$1.$ How would you dealt with the bank interest charged by bank on overdraft?
$A.$ Plus $Rs\ . 650$
$B.$ Plus $Rs\ . 1,300$
$C.$ Not be recorded
$D.$ None of the above
$2.$ A cheque of $Rs\ . 800$ was banked and credited, but omitted to be recorded in the Cash Book. in Bank Reconciliation Statement, Sujan should:
$A.$ Ignore it
$B.$ Record it as minus $Rs\ .800$
$C.$ Record it as plus $Rs\ . 800$
$D.$ Either $A$ or $C$
$3.$ A cheque for $Rs\ . 1,000$ debited in the cash book was omitted to be banked. This error had not affected the balances so it should be ignored$-$ says Sujan. Sujan is
$A.$ Right
$B.$ No she is wrong, she should minus it from passbook balance
$C.$ No she is wrong, she should plus it in passbook balance
$D.$ Cannot be determined
$4.$ Cheques amounting to $Rs\ . 7,800$ were drawn on $27^{th}$ March, of which cheques of $Rs\ . 2,400$ were cashed upto $31^{st}$ march$, 2022$. This transaction should be recorded as $-$
$A.$ Minus $Rs\ . 7,800$
$B.$ Minus $Rs\ . 2,400$
$C.$ Minus $Rs\ . 5,400$
$D.$ Minus $Rs\ . 10,200$
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Virat is a businessman of Garments. He purchases raw material of Rs. 10,000 per week from his supplier Rohit. He has a team of 10 workers. Workers work in his business on basis of daily wages of Rs. 400 per day for each worker. During the month of April Virat withdrew finished goods of Rs. 1,000 (Market Value Rs.5,000) for his personal use. Virat paid Rs. 500 for electricity charges during the month. He sales goods of Rs. 40,000 at 20% Trade Discount during the month.
He wants to expand his business. So, he purchased an old machinery from his friend for Rs. 10,000 and spent Rs. 1,000 for its repair and maintenance. Virat’s business is increasing day by day. He pays all the taxes on time. Answer the following questions from the above case:
1. Which account will be credited for withdrawal of goods by Virat for personal use?
(A) Purchase
(B) Drawings
(C) Capital
(D) Sales
2. Where amount of Trade discount given on sale will be recorded?
(A) Journal Book
(B) Cash Book
(C) Sales Book
(D) None of these
3. Which account will be debited for Repair of old machinery?
(A) Repair Account
(B) Purchase Account
(C) Machinery Account
(D) Both a & b
4. At what value Goods will be shown in the books of account?
(A) Market Value
(B) Cost Value
(C) Difference of a & b
(D) None of these
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Ritu, a fresh graduate joined as an accountant in ABC Ltd . She wastold to prepare the Trial Balance of the organization. As she hadnever prepared Trial balance earlier, she was not feeling confident,therefore she was explained in detail about the features andimportance of Trial Balance.

Q1.When is a Trial Balance prepared?
(a)Before recording the transactions in the Journal
(b)Before Ledger posting
(c)After completion of posting from journal to the ledger
(d)Both a and b

Q2.Which of the following is not a feature of Trial Balance?
(a)It is a complete record of all ledger accounts and cash book
(b) It is prepared as a result of the double entry system of bookkeeping, though it is not a part of it.
(c) It assists in verifying the arithmetic accuracy of posting entriesfrom journal to ledger accounts
(d) It is a conclusive proof of the accuracy of the books of account

Q3.What is the reason behind agreement of total of debit side of TrialBalance with the credit side?
(a)Single entry system
(b)Double entry system
(c)Application of accrual concept
(d)Application of matching concept

Q4.What is the nature of Trial Balance?
(a)Real account
(b)Nominal account
(c)Personal account
(d)List of ledger balances
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