In debit balance as per cash book why deposit in transit is added and unpresented cheques are subtracted?
Dear Student,
Deposit in transit refers to a situation wherein the cheque has been deposited in bank & have been debited in cash book also , but the amount has actually not been credited into the account. Thus, while preparing Bank reconciliation statement as per Cash book deposit in transit would be deducted as it is already been included in cash book. But while preparing BRS as per Bank statement, deposit in transit should be added.
Unpresented cheques refers to those cheques which have been issued to the supplier, but the supplier/creditor have not yet presented/deposited those cheques in bank. On issuing these type of cheques, cash book would have been credited but since cheque has not been presented to bank bank A/c would not show any debits.
Thus, when BRS is prepared as per cash book, un-presented cheques would be added back . And if prepared as per Bank statement, un-presented cheques would be deducted to reach to the balance as per cash book.
Regards,
Deposit in transit refers to a situation wherein the cheque has been deposited in bank & have been debited in cash book also , but the amount has actually not been credited into the account. Thus, while preparing Bank reconciliation statement as per Cash book deposit in transit would be deducted as it is already been included in cash book. But while preparing BRS as per Bank statement, deposit in transit should be added.
Unpresented cheques refers to those cheques which have been issued to the supplier, but the supplier/creditor have not yet presented/deposited those cheques in bank. On issuing these type of cheques, cash book would have been credited but since cheque has not been presented to bank bank A/c would not show any debits.
Thus, when BRS is prepared as per cash book, un-presented cheques would be added back . And if prepared as per Bank statement, un-presented cheques would be deducted to reach to the balance as per cash book.
Regards,