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JAMB Principles of Accounts 2011 Question 13

Question 13

Banking and Bank Reconciliation

In a bank reconciliation statement, interest charged for overdrawn balances should be added to the

  1. A.balance as per bank statement
  2. B.bank balance as per adjusted cash book
  3. C.aggregate balance as per cash book
  4. D.bank balance as per cash book.
Show the answer and explanation

Answer: A (balance as per bank statement)

Explanation

Interest on an overdraft is already in the bank statement but not in the cash book. When the reconciliation starts from the balance as per bank statement, the interest is added back to that balance to arrive at the cash book figure.