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In the BRS we try to match cash balance in the books with the bank balances right? So if suppose our cash book shows a balance of 149k and bank account shows a balance of 161k, the difference is 12k. This is because of the cheque issued of an amount of 12k but the cheque has not been presented by the supplier (Unpresented Cheques). So in this case what should be the cash balance on the face of our balance sheet? Should it be 161k or 149k? If we show 161k then wouldn’t that be an overstatement as in reality we have already issued the cheque and the amount is to be reduced. If we show 149K then it would be like deceiving the shareholder as Bank balance say a different story. Could you help me in this regard?
Thanks,
Amer BakodahWe always show the correct balance from the cash book (which is your example is 149K).
That is certainly not deceiving anyone – the bank statement may show 161K, but that does not mean that the company can spend 161K !!!!
John Moffat. What happens if the bank balance is the one reported instead of the cash balance?
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