Q.On 30 April 2026, the Pass Book of Kavya Traders showed a credit balance of ₹25,600. On comparison with the Cash Book, the following differences were found:

Starting from the Pass Book, every sign is the mirror image of starting from the Cash Book: cheques deposited-not-collected are ADDED, while cheques issued-not-presented, dividend already collected by the bank, and a customer's direct deposit are all SUBTRACTED.

25,600 + 3,500 (cheques deposited, not collected) − 1,800 (cheque issued, not presented) − 700 (dividend collected by bank) − 1,200 (customer's direct deposit) = ₹25,400.

Bank Reconciliation Statement of Kavya Traders as on 30 April 2026 (starting from Pass Book balance)

Reasoning: (i) A cheque deposited but not yet collected has NOT yet been added by the bank, so the Pass Book is, relatively, LOWER than the Cash Book on this account — moving towards the Cash Book figure, it is ADDED. (ii) A cheque issued but not yet presented has already reduced the Cash Book but not the Pass Book — the Pass Book is, relatively, HIGHER — so it is SUBTRACTED to move towards the (lower) Cash Book figure. (iii) and (iv) are both amounts the bank has ALREADY added to its own balance but the firm has not yet recorded in its Cash Book — the Pass Book is, relatively, HIGHER by these amounts, so both are SUBTRACTED to move towards the Cash Book figure.

Cross-check: starting instead from the Cash Book balance of ₹25,400 and adding the cheque issued (₹1,800), the dividend (₹700), and the direct deposit (₹1,200), then subtracting the cheque deposited but not collected (₹3,500), gives 25,400 + 1,800 + 700 + 1,200 − 3,500 = ₹25,600 — exactly the given Pass Book balance, confirming the reconciliation is correct both ways.

A frequent error is applying the SAME signs used for a 'starting from Cash Book' statement to a 'starting from Pass Book' statement — every sign must be reversed; when in doubt, cross-check by working the reconciliation in the opposite direction and confirming it returns to the originally given balance.