in brs, how wrongly credit in cash book will increase the balance of pass book

Dear Student,
Bank Reconciliation Statement (BRS) is prepared to reconcile the balances of both the books i.e. Cash Book and Pass Book. 
When the starting balance is 'Balance as per Cash Book', we make it equal to the balance as per Pass Book.
So, when wrong credit is made in Cash Book, the balance as per Cash Book decreases (Balance = Debit side - Credit side). However, the balance as per Pass Book stands higher (as entries are correctly passed), therefore, to make the Cash Book balance = Pass Book balance; we add it to balance as per Cash Book.

Remember: Whenever you are practicing BRS questions, just try to compare the balances of both the books along with the effect of the transaction on the balance. Then, all your questions will be easily worked out.

Hope this clarifies your doubt.
Keep posting!!

  • 0
What are you looking for?