Bank reconciliation

Topic 10: Bank Reconciliation — 50 Hard MCQs

1. A cash book shows a debit balance of $8400. The bank statement shows bank charges of $120 not yet recorded in the cash book and a direct debit of $680 not yet recorded.

What is the updated cash book balance?

A $7600 debit
B $8000 debit
C $9200 debit
D $9200 credit

2. A cash book shows a debit balance of $12 500. Bank interest received of $250 and credit transfer from a customer of $1700 appear on the bank statement but not in the cash book.

What is the updated cash book balance?

A $10 550 debit
B $12 250 debit
C $14 450 debit
D $14 450 credit

3. A cash book shows a credit balance of $2300. Bank charges of $150 and a standing order of $600 have not been recorded.

What is the updated cash book balance?

A $1550 credit
B $3050 credit
C $1550 debit
D $3050 debit

4. A cash book shows a debit balance of $5600. A cheque received from a customer for $900 has been dishonoured by the bank.

What is the updated cash book balance?

A $4700 debit
B $6500 debit
C $4700 credit
D $6500 credit

5. A cash book shows a debit balance of $7200. A bank error has credited another customer’s deposit of $400 to the business bank statement.

How is this treated when updating the cash book?

A add $400
B subtract $400
C no entry in updated cash book
D record as income

6. A cash book shows a debit balance of $9800. The bank statement shows a direct credit of $1500 from a customer and bank charges of $220.

What is the updated cash book balance?

A $8080 debit
B $10 080 debit
C $11 080 debit
D $11 520 debit

7. A cash book shows a credit balance of $1800. The bank statement shows bank interest charged of $90 and a credit transfer received of $650.

What is the updated cash book balance?

A $1240 credit
B $2360 credit
C $1240 debit
D $2360 debit

8. A cash book balance before update is $3000 debit. The bank statement includes a standing order of $500, bank charges of $75, and interest received of $60.

What is the updated cash book balance?

A $2485 debit
B $2515 debit
C $3635 debit
D $3635 credit

9. Which item is used to update the cash book?

A unpresented cheque
B uncredited deposit
C bank charges
D cheque entered correctly in both cash book and bank statement

10. Which item appears in the bank reconciliation statement but not in the updated cash book?

A bank charges
B standing order
C unpresented cheque
D dishonoured cheque

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

11. A bank statement shows a credit balance of $15 000. There are unpresented cheques of $2800 and uncredited deposits of $1900.

What should be the updated cash book balance?

A $12 100 debit
B $14 100 debit
C $15 900 debit
D $19 700 debit

12. A bank statement shows a credit balance of $9600. Unpresented cheques are $1400. Uncredited deposits are $2200.

What is the updated cash book balance?

A $6800 debit
B $8800 debit
C $10 400 debit
D $13 200 debit

13. A bank statement shows an overdraft of $4200. Unpresented cheques are $1800. Uncredited deposits are $2500.

What is the updated cash book balance?

A $3500 credit
B $4900 credit
C $5900 credit
D $8500 credit

14. A bank statement shows an overdraft of $7000. There are unpresented cheques of $1200 and uncredited deposits of $900.

What is the updated cash book balance?

A $6700 credit
B $7300 credit
C $7900 credit
D $9100 credit

15. A cash book shows an updated debit balance of $11 200. Unpresented cheques are $2600 and uncredited deposits are $1700.

What should the bank statement balance be?

A $10 300 credit
B $12 100 credit
C $15 500 credit
D $6900 overdraft

16. A cash book shows an updated debit balance of $7500. Unpresented cheques are $1300 and uncredited deposits are $2100.

What should the bank statement balance be?

A $6700 credit
B $8300 credit
C $10 900 credit
D $4100 overdraft

17. A cash book shows an updated credit balance of $3800. Unpresented cheques are $900 and uncredited deposits are $1400.

What should the bank statement balance be?

A $3300 overdraft
B $4300 overdraft
C $5200 overdraft
D $1500 credit

18. A cash book shows an updated overdraft of $5200. Unpresented cheques are $1600 and uncredited deposits are $1000.

What should the bank statement balance be?

A $4600 overdraft
B $5800 overdraft
C $7800 overdraft
D $2600 credit

19. A bank statement shows a credit balance of $18 000. Unpresented cheques total $3900. Uncredited deposits total $2400. The bank has wrongly debited the account with another business’s cheque of $700.

What should be the updated cash book balance?

A $18 800 debit
B $19 500 debit
C $20 200 debit
D $16 600 debit

20. A bank statement shows a credit balance of $12 400. Unpresented cheques are $1700. Uncredited deposits are $2600. The bank has wrongly credited the account with $500.

What should be the updated cash book balance?

A $10 600 debit
B $11 000 debit
C $11 500 debit
D $13 800 debit

21. Which item is deducted from the bank statement credit balance in a bank reconciliation statement?

A unpresented cheques
B bank charges
C direct debits
D credit transfers received

22. Which item is added to the bank statement credit balance in a bank reconciliation statement?

A uncredited deposits
B unpresented cheques
C standing orders
D bank charges

23. Which item is added to a bank statement overdraft when preparing a reconciliation to the updated cash book?

A uncredited deposits
B bank charges already recorded in cash book
C unpresented cheques
D credit transfer already recorded in cash book

24. Which item is deducted from a bank statement overdraft when preparing a reconciliation to the updated cash book?

A uncredited deposits
B unpresented cheques
C bank charges
D direct debit

25. A cheque paid to a supplier for $540 was entered in the cash book as $450. The bank statement shows the correct amount.

What adjustment is needed in the cash book?

A add $90
B subtract $90
C add $990
D subtract $990

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

26. A cheque received from a customer for $780 was entered in the cash book as $870. The bank statement shows the correct amount.

What adjustment is needed in the cash book?

A add $90
B subtract $90
C add $1650
D subtract $1650

27. A cheque paid for rent of $1200 was entered correctly in the cash book but had not yet appeared on the bank statement.

How is it treated?

A added to bank statement credit balance
B deducted from bank statement credit balance
C deducted from cash book balance
D added to cash book balance

28. Cash received of $2500 was banked, but it had not yet appeared on the bank statement.

How is it treated?

A added to bank statement credit balance
B deducted from bank statement credit balance
C added to cash book balance
D deducted from cash book balance

29. A business has updated cash book balance of $6200 debit. Unpresented cheques are $1700. Uncredited deposits are $900.

What is the bank statement balance?

A $5400 credit
B $7000 credit
C $8800 credit
D $3600 overdraft

30. A business has updated cash book balance of $4400 credit. Unpresented cheques are $600. Uncredited deposits are $1500.

What is the bank statement balance?

A $3500 overdraft
B $5300 overdraft
C $6500 overdraft
D $500 credit

31. A business has a bank statement balance of $8500 credit. Bank charges of $200 were not recorded in the cash book. Unpresented cheques were $1400. Uncredited deposits were $900.

What was the original cash book balance before update?

A $7200 debit
B $7400 debit
C $8200 debit
D $8800 debit

32. A business has a bank statement overdraft of $6200. A direct debit of $400 was not recorded in the cash book. Unpresented cheques are $1500. Uncredited deposits are $800.

What was the original cash book balance before update?

A $5100 credit
B $5500 credit
C $5900 credit
D $7100 credit

33. A cash book shows a debit balance of $10 500. A cheque received from a customer for $600 was dishonoured. Bank charges of $80 were not recorded. Unpresented cheques are $1600. Uncredited deposits are $2100.

What is the bank statement balance?

A $11 920 credit
B $10 420 credit
C $9400 credit
D $10 920 credit

34. A cash book shows a credit balance of $2800. The bank statement shows interest charged $120, direct credit from customer $900, unpresented cheques $700 and uncredited deposits $500.

What is the bank statement balance?

A $1320 overdraft
B $1720 overdraft
C $2520 overdraft
D $3320 overdraft

35. A cash book shows a debit balance of $5000. The bank statement shows bank charges $150, credit transfer received $1200 and dishonoured cheque $400. Unpresented cheques are $1800 and uncredited deposits are $900.

What is the bank statement balance?

A $4850 credit
B $5750 credit
C $6650 credit
D $8450 credit

36. A cash book shows an overdraft of $3600. The bank statement includes bank charges $100, credit transfer received $700, and direct debit $250. Unpresented cheques are $900 and uncredited deposits are $1300.

What is the bank statement balance?

A $3150 overdraft
B $3950 overdraft
C $4750 overdraft
D $2350 overdraft

37. A business starts with a cash book debit balance of $2400. A receipt of $900 was correctly shown on the bank statement but not entered in the cash book. A payment of $300 was correctly shown on the bank statement but not entered in the cash book.

What is the updated cash book balance?

A $1800 debit
B $3000 debit
C $3600 debit
D $1200 debit

38. A business starts with a cash book credit balance of $1500. A bank charge of $200 and a direct credit of $750 were not entered in the cash book.

What is the updated cash book balance?

A $950 credit
B $2050 credit
C $950 debit
D $2450 debit

39. Which statement about a bank reconciliation is correct?

A It corrects errors in the bank statement by changing the cash book.
B It explains differences between cash book and bank statement balances.
C It records credit sales and credit purchases.
D It is prepared only when the bank statement and cash book already agree.

40. Which item would cause the cash book balance to be lower than the bank statement balance?

A unpresented cheques
B uncredited deposits
C bank charges not recorded in cash book
D direct debit not recorded in cash book

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

41. Which item would cause the cash book balance to be higher than the bank statement balance?

A uncredited deposits
B unpresented cheques
C credit transfer received not recorded in cash book
D bank interest received not recorded in cash book

42. A business receives a bank statement showing a credit balance. What does this mean from the business’s point of view?

A bank overdraft
B asset
C liability
D expense

43. A business receives a bank statement showing a debit balance. What does this mean from the business’s point of view?

A asset
B income
C bank overdraft
D capital

44. A cash book shows a debit balance. What does this mean?

A the business has money at bank
B the business has a bank overdraft
C the bank owes money to another customer
D the owner has drawings

45. A cash book shows a credit balance. What does this mean?

A money at bank
B bank overdraft
C trade receivable
D prepaid expense

46. A bank statement has wrongly omitted a deposit of $2000 that was correctly entered in the cash book and actually paid into the bank before the statement date.

How is this treated in reconciliation?

A add to bank statement balance
B deduct from bank statement balance
C deduct from cash book balance
D ignore completely

47. The bank statement has wrongly recorded a payment of $350 twice. The cash book is correct.

How is this treated in reconciliation?

A add $350 to bank statement balance
B deduct $350 from bank statement balance
C deduct $350 from cash book balance
D add $700 to cash book balance

48. A bank statement has wrongly credited the business with $800 belonging to another customer. The cash book is correct.

How is this treated in reconciliation?

A add $800 to bank statement balance
B deduct $800 from bank statement balance
C add $800 to cash book balance
D record $800 as income

49. A bank statement has wrongly debited the business with $450 belonging to another customer. The cash book is correct.

How is this treated in reconciliation?

A add $450 to bank statement balance
B deduct $450 from bank statement balance
C deduct $450 from cash book balance
D record $450 as expense

50. Which item should never be used to update the cash book?

A bank charges shown on bank statement
B direct debit shown on bank statement
C unpresented cheque already entered in cash book
D dishonoured cheque shown on bank statement

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

1. A — $7600 debit

• Cash book debit balance = $8400

• Bank charges = subtract $120

• Direct debit = subtract $680

• Updated cash book = 8400 – 120 – 680 = $7600 debit

2. C — $14 450 debit

• Cash book debit balance = $12 500

• Bank interest received = add $250

• Credit transfer = add $1700

• Updated cash book = 12 500 + 250 + 1700 = $14 450 debit

3. B — $3050 credit

• Cash book credit balance means overdraft = $2300

• Bank charges and standing order increase overdraft

• Updated overdraft = 2300 + 150 + 600 = $3050 credit

4. A — $4700 debit

• Dishonoured cheque means money previously added to bank is removed.

• Updated cash book = 5600 – 900 = $4700 debit

5. C — no entry in updated cash book

• This is a bank error.

• The cash book is not changed.

• It is adjusted in the bank reconciliation statement.

6. C — $11 080 debit

• Cash book balance = $9800 debit

• Add direct credit = $1500

• Less bank charges = $220

• Updated cash book = 9800 + 1500 – 220 = $11 080 debit

7. A — $1240 credit

• Starting overdraft = $1800

• Bank interest charged increases overdraft by $90

• Credit transfer received reduces overdraft by $650

• Updated overdraft = 1800 + 90 – 650 = $1240 credit

8. A — $2485 debit

• Cash book balance = $3000 debit

• Less standing order = $500

• Less bank charges = $75

• Add interest received = $60

• Updated cash book = 3000 – 500 – 75 + 60 = $2485 debit

9. C — bank charges

• Bank charges are shown on the bank statement first.

• They must be entered in the updated cash book.

10. C — unpresented cheque

• Unpresented cheques are already recorded in the cash book.

• They have not yet appeared on the bank statement.

• They are used in the bank reconciliation statement only.

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

11. B — $14 100 debit

• Bank statement credit balance = $15 000

• Add uncredited deposits = $1900

• Less unpresented cheques = $2800

• Updated cash book = 15 000 + 1900 – 2800 = $14 100 debit

12. C — $10 400 debit

• Bank statement credit balance = $9600

• Add uncredited deposits = $2200

• Less unpresented cheques = $1400

• Updated cash book = 9600 + 2200 – 1400 = $10 400 debit

13. A — $3500 credit

• Bank statement overdraft = $4200

• Uncredited deposits reduce overdraft = subtract $2500

• Unpresented cheques increase overdraft = add $1800

• Updated cash book overdraft = 4200 – 2500 + 1800 = $3500 credit

14. B — $7300 credit

• Bank statement overdraft = $7000

• Uncredited deposits reduce overdraft = subtract $900

• Unpresented cheques increase overdraft = add $1200

• Updated cash book overdraft = 7000 – 900 + 1200 = $7300 credit

15. B — $12 100 credit

• Updated cash book debit = $11 200

• Bank statement balance = cash book + unpresented cheques – uncredited deposits

• = 11 200 + 2600 – 1700

• = $12 100 credit

16. A — $6700 credit

• Updated cash book debit = $7500

• Add unpresented cheques = $1300

• Less uncredited deposits = $2100

• Bank statement = 7500 + 1300 – 2100 = $6700 credit

17. B — $4300 overdraft

• Updated cash book overdraft = $3800

• Unpresented cheques make bank statement overdraft lower by $900

• Uncredited deposits make bank statement overdraft higher by $1400

• Bank statement overdraft = 3800 – 900 + 1400 = $4300 overdraft

18. A — $4600 overdraft

• Updated cash book overdraft = $5200

• Less unpresented cheques = $1600

• Add uncredited deposits = $1000

• Bank statement overdraft = 5200 – 1600 + 1000 = $4600 overdraft

19. Correct value: $17 200 debit — no option matches

• Bank statement credit balance = $18 000

• Add uncredited deposits = $2400

• Less unpresented cheques = $3900

• Add bank error wrongly debited = $700

• Updated cash book = 18 000 + 2400 – 3900 + 700 = $17 200 debit

• The option set needs correction.

20. Correct value: $12 800 debit — no option matches

• Bank statement credit balance = $12 400

• Add uncredited deposits = $2600

• Less unpresented cheques = $1700

• Less bank error wrongly credited = $500

• Updated cash book = 12 400 + 2600 – 1700 – 500 = $12 800 debit

• The option set needs correction.

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

21. A — unpresented cheques

• Starting with bank statement credit balance:

  • unpresented cheques are deducted

  • because the cash book already shows them but the bank statement does not.

22. A — uncredited deposits

• Starting with bank statement credit balance:

  • uncredited deposits are added

  • because cash book has recorded them but bank statement has not.

23. C — unpresented cheques

• With a bank statement overdraft, unpresented cheques increase the overdraft when reconciling to the updated cash book.

• They have been deducted in the cash book but not yet by the bank.

24. A — uncredited deposits

• With a bank statement overdraft, uncredited deposits reduce the overdraft.

• They have been added in the cash book but not yet by the bank.

25. B — subtract $90

• Cheque paid = $540

• Recorded in cash book = $450

• Payment understated by $90

• Cash book bank balance must be reduced by $90

26. B — subtract $90

• Cheque received = $780

• Recorded in cash book = $870

• Receipt overstated by $90

• Cash book bank balance must be reduced by $90

27. B — deducted from bank statement credit balance

• This is an unpresented cheque.

• It has reduced the cash book but not the bank statement yet.

• Deduct it from the bank statement balance.

28. A — added to bank statement credit balance

• This is an uncredited deposit.

• It has increased the cash book but not the bank statement yet.

• Add it to the bank statement balance.

29. B — $7000 credit

• Updated cash book debit = $6200

• Add unpresented cheques = $1700

• Less uncredited deposits = $900

• Bank statement balance = 6200 + 1700 – 900 = $7000 credit

30. B — $5300 overdraft

• Updated cash book overdraft = $4400

• Less unpresented cheques = $600

• Add uncredited deposits = $1500

• Bank statement overdraft = 4400 – 600 + 1500 = $5300 overdraft

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

31. C — $8200 debit

• Bank statement credit balance = $8500

• Add uncredited deposits = $900

• Less unpresented cheques = $1400

• Updated cash book = 8500 + 900 – 1400 = $8000 debit

• Bank charges of $200 were not recorded, so original cash book before update = 8000 + 200 = $8200 debit

32. Correct value: $6500 credit — no option matches

• Bank statement overdraft = $6200

• Less uncredited deposits = $800

• Add unpresented cheques = $1500

• Updated cash book overdraft = 6200 – 800 + 1500 = $6900 credit

• Direct debit $400 was not recorded, so original overdraft before update = 6900 – 400 = $6500 credit

• The option set needs correction.

33. Correct value: $9320 credit — no option matches

• Original cash book debit = $10 500

• Less dishonoured cheque = $600

• Less bank charges = $80

• Updated cash book = 10 500 – 600 – 80 = $9820 debit

• Bank statement = 9820 + unpresented cheques 1600 – uncredited deposits 2100

• = $9320 credit

• The option set needs correction.

34. Correct value: $1820 overdraft — no option matches

• Original cash book overdraft = $2800

• Add bank interest charged = $120

• Less direct credit from customer = $900

• Updated cash book overdraft = 2800 + 120 – 900 = $2020 credit

• Bank statement overdraft = 2020 – unpresented cheques 700 + uncredited deposits 500

• = $1820 overdraft

• The option set needs correction.

35. Correct value: $6550 credit — no option matches

• Original cash book debit = $5000

• Less bank charges = $150

• Add credit transfer = $1200

• Less dishonoured cheque = $400

• Updated cash book = 5000 – 150 + 1200 – 400 = $5650 debit

• Bank statement = 5650 + 1800 – 900

• = $6550 credit

• The option set needs correction.

36. Correct value: $3650 overdraft — no option matches

• Original cash book overdraft = $3600

• Add bank charges = $100

• Less credit transfer = $700

• Add direct debit = $250

• Updated cash book overdraft = 3600 + 100 – 700 + 250 = $3250 credit

• Bank statement overdraft = 3250 – 900 + 1300

• = $3650 overdraft

• The option set needs correction.

37. B — $3000 debit

• Original cash book debit = $2400

• Add receipt not entered = $900

• Less payment not entered = $300

• Updated cash book = 2400 + 900 – 300 = $3000 debit

38. A — $950 credit

• Original overdraft = $1500

• Bank charge increases overdraft by $200

• Direct credit reduces overdraft by $750

• Updated overdraft = 1500 + 200 – 750 = $950 credit

39. B — It explains differences between cash book and bank statement balances

• Bank reconciliation explains timing differences and errors.

• It does not record credit sales or purchases.

40. A — unpresented cheques

• Unpresented cheques have been deducted in the cash book.

• The bank has not yet deducted them.

• So the cash book balance is lower than the bank statement balance.

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

41. A — uncredited deposits

• Uncredited deposits have been added in the cash book.

• The bank statement has not yet added them.

• So the cash book balance is higher than the bank statement balance.

42. B — asset

• A bank statement credit balance means the bank owes money to the business.

• From the business’s point of view, this is money at bank, an asset.

43. C — bank overdraft

• A bank statement debit balance means the business owes the bank.

• From the business’s point of view, it is an overdraft/current liability.

44. A — the business has money at bank

• A debit balance in the cash book means bank/cash asset.

• It shows money available at bank.

45. B — bank overdraft

• A credit balance in the cash book means the business has overdrawn.

• It is a current liability.

46. A — add to bank statement balance

• The cash book is correct.

• The bank statement omitted a deposit.

• Add the missing deposit to the bank statement balance in reconciliation.

47. A — add $350 to bank statement balance

• The bank deducted the payment twice.

• The bank statement is too low by $350.

• Add $350 in the reconciliation.

48. B — deduct $800 from bank statement balance

• The bank wrongly credited $800.

• Bank statement is too high.

• Deduct $800 in the reconciliation.

49. A — add $450 to bank statement balance

• The bank wrongly debited $450.

• Bank statement is too low.

• Add $450 in the reconciliation.

50. C — unpresented cheque already entered in cash book

• Unpresented cheques are already recorded in the cash book.

• They are used in reconciliation only.

• Do not update the cash book again, warna double counting ka funeral ho jata hai.

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.