Briefly explain the statement 'wrongly debited by the bank' with the help of an example.
Wrongly debited by the bank refers to an error committed by the bank where it incorrectly deducts an amount from the customer's account. This is a mistake on the part of the bank and not a legitimate transaction.
When the bank wrongly debits an account, the balance as per passbook becomes less than the balance as per the cash book. This happens because the firm is unaware of this erroneous debit until they receive the bank statement, so no corresponding entry is made in the cash book.
Example: If the bank debits ₹500 from a firm's account by mistake (perhaps confusing it with another customer's account), the passbook will show a reduced balance while the cash book remains unaffected. This difference is reconciled in the Bank Reconciliation Statement.
Explanation
The textbook context mentions 'Wrongly debited by bank ₹ 500' as an item in illustration 4, and Section 5.1.2 explains that 'Sometimes the difference between the two balances may be accounted for by an error on the part of the bank.' This is distinct from legitimate direct debits like interest, charges, or standing instructions. A wrong debit is purely an error that the bank must correct upon notification.