Banking and Cash Operations
Banking and Cash Operations covers cheques, electronic remittances and the reconciliation of the cash book with the bank passbook - the single most examined computation in this domain.
Cheque and remittance rules
- Bearer cheque: payable to whoever presents it. Order cheque: payable after endorsement.
- Crossing (two parallel lines) means the cheque must be collected through a bank account; 'A/c payee' restricts credit to the named payee's account.
- A stale cheque is one older than three months from its date; a post-dated cheque cannot be paid before its date.
- NEFT is batch-based with no minimum; RTGS is real-time for high-value payments (minimum ₹2 lakh); IMPS and UPI run 24x7 for retail transfers.
- Imprest system: a fixed float is given to the petty cashier, who is reimbursed only for what has been spent, restoring the float.
Worked example
Cash book (bank column) shows a debit balance of ₹50,000. A cheque of ₹8,000 issued to a supplier is not yet presented, and the bank has charged ₹500 not entered in the cash book. Passbook balance = 50,000 + 8,000 − 500 = ₹57,500. The un-presented cheque already reduced the cash book, so it must be added back; the unrecorded charge must be deducted.
Traps that cost marks
- Adding where you should subtract, because the rule flips depending on whether you start from the cash book or the passbook.
- Ignoring the direction of an overdraft (credit balance in the cash book).
- Missing direct credits - interest allowed, a customer's direct deposit, standing instructions.