Book-Keeping and Accountancy · Ch 6 — Bank Reconciliation Statement
Favourable Balance and Bank Overdraft
Favourable Balance and Bank Overdraft
A bank balance can be of two opposite kinds, and knowing which kind you are starting from decides whether an item is ADDED or SUBTRACTED in the BRS.
Favourable Balance
A balance representing money the firm actually holds at the bank; it appears as a DEBIT balance in the firm's Cash Book and, being a mirror image, as a CREDIT balance in the bank's Pass Book.
Overdraft (Unfavourable Balance)
A balance representing money the firm owes the bank, because it has drawn out more than it had deposited (under a bank overdraft arrangement); it appears as a CREDIT balance in the firm's Cash Book and, being a mirror image, as a DEBIT balance in the bank's Pass Book. …
A balance representing money the firm actually holds at the bank; a Debit balance in the Cash Book and a Credit bala …
A balance representing money the firm owes the bank; a Credit balance in the Cash Book and a Debit balanc …