O Level Accounting (7707)•7707/12/M/J/21
Explanation
Bank Reconciliation Adjustment Steps:
- Note bank statement shows overdraft of $1460, a negative balance.
- Add uncredited deposits of $255, as these are recorded in cash book but not yet in bank statement.
- Subtract unpresented cheques of $385, as these are recorded in cash book but not yet deducted from bank statement.
- Calculate: -255 - 1590, a debit balance in cash book.
Why the correct option is correct:
- Bank reconciliation formula adjusts statement balance by adding uncredited deposits and subtracting unpresented cheques to match cash book balance.
Why the others are wrong:
- A: Results from incorrect addition of unpresented cheques instead of subtraction.
- B: Assumes credit (positive) balance, but adjustments confirm deeper overdraft.
- D: Uses unadjusted bank statement balance, ignoring timing differences.
Final answer: C
Topic: Bank reconciliation
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