Question 8 of 50intermediate💡 UnderstandFill in the Blanks1 mark

When the cheques are not presented for payment, favourable balance as per the cash book is ...than that of the passbook.

Correct Answer

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Exercise: Test Your Understanding - I | Q: II(vii) | (Page 7)
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Explanation

According to point 7 in the provided context: 'Favourable bank balance as per the cash book will be less than the bank passbook balance when there are unpresented cheques for payment.' When cheques are issued by the business, they are immediately recorded (credited) in the cash book, reducing the balance. However, until these cheques are presented to the bank for payment, the passbook still shows the original higher balance. Thus, the favourable balance as per cash book is less than the passbook balance.

Solution Steps

  1. Step 1: Cheques issued are recorded in cash book immediately, reducing cash book balance.

  2. Step 2: Same cheques not yet presented to bank, so passbook balance remains higher.

  3. Step 3: Therefore, favourable balance as per cash book is LESS than passbook balance.

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