Updating Cash Book in Bank Reconciliation

Steps:

• Review bank statement for items not recorded in cash book, like charges or interest.
• Adjust cash book for these timing-independent differences to match bank records.
• Ignore unpresented cheques or deposits in transit, as they do not update cash book.
• Select options listing only cash book adjustment items.

Why A is correct:

• Items 1 and 2 (e.g., bank charges, interest) are bank statement entries absent from cash book, requiring update per reconciliation definition.

Why the others are wrong:

• B includes 4 (e.g., unpresented cheque), a timing difference not updating cash book.
• C includes 3 (e.g., deposit in transit), another timing item ignored in cash book update.
• D pairs 3 and 4, both timing differences excluded from cash book adjustments.

Final answer: A