GCEFinancial AccountingBank Reconciliation2021

A cheque for ₦7,600 received from a customer was correctly entered in the cash book but was returned unpaid by the bank (dishonoured). The effect on the bank reconciliation statement is that the

Acash book balance will be reduced by ₦7,600CORRECT
Bbank statement balance will be increased by ₦7,600
Ccash book balance will be increased by ₦7,600
Dbank statement balance will be reduced by ₦7,600
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Why the answer is A, and why the others tempt you.
A dishonoured cheque means the bank has reversed the credit on the bank statement, reducing the bank statement balance. The cash book, however, still shows the receipt unless corrected. To update the cash book, the dishonoured cheque of ₦7,600 must be credited (deducted), reducing the cash book balance. This brings the cash book into agreement with the bank statement.
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