PRC-1 · Chapter 9 · Question 8 of 100
A cheque received from a customer was deposited but later returned by the bank as 'dishonoured'. What is the correct adjustment in the cash book?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Credit the cash book.
Explanation
When a cheque is initially deposited, it is debited to the cash book. If it is dishonoured (bounces), the receipt is invalid, and the cash book must be credited to reverse the entry and reduce the bank balance.
More Bank Reconciliations MCQs
- Q10An error made by the bank by incorrectly debiting the business account with Rs. 5,000 for another company's cheque should be corrected by:
- Q11A Bank Reconciliation Statement (BRS) is typically prepared by:
- Q12If it is found that the receipt side of the cash book has been under-casted by Rs. 1,000, how is this error corrected?
- Q13A cheque of Rs. 1,678 was issued to a supplier but mistakenly recorded in the cash book as Rs. 1,890. What is the correction required in…
- Q14The bank correctly recorded the payment of a cheque as Rs. 236, while in the cash book it was written as Rs. 263. What should be done to…