Amended Cash Book in Bank Reconciliation Statement

Amended Cash Book is one of the most useful ideas in Bank Reconciliation Statement, but students often meet it only after they have already learnt the normal add and deduct rules.

That is why it can feel confusing at first.

In a normal Bank Reconciliation Statement, you start with the balance as per cash book or pass book and explain why the two balances are different. In an amended cash book question, you do one extra step before that:

First correct the cash book.
Then prepare the Bank Reconciliation Statement.

The amended cash book is not a separate mystery. It is simply the bank column of the cash book after recording items that the business should have recorded, but had not recorded yet.

Once you understand this, amended cash book questions become much easier and much neater.

What Does Amended Cash Book Mean?

An amended cash book is the corrected bank column of the cash book.

The business keeps the cash book. The bank keeps the pass book or bank statement. When both are compared, some items may appear in the pass book but not in the cash book. Some mistakes may also be found in the cash book.

For example:

• bank charges are shown in the pass book but not in the cash book
• interest credited by the bank is shown in the pass book but not in the cash book
• a customer directly deposits money into the bank, but the business has not entered it
• the cash book has recorded an amount wrongly
• the payment side of the bank column has been undercast or overcast

These items affect the business’s own record. So before preparing the final Bank Reconciliation Statement, the cash book should be corrected.

That corrected version is called the amended cash book, adjusted cash book, or corrected cash book balance.

Why Is It Prepared Before BRS?

Bank Reconciliation Statement is meant to explain the difference between the cash book balance and the pass book balance.

But suppose the cash book itself is incomplete. Then the starting balance is not reliable.

For example, if the bank has debited Rs. 300 as bank charges and the business has not entered it, the cash book balance is too high. If the bank has credited Rs. 1,000 as interest and the business has not entered it, the cash book balance is too low.

If you directly prepare a BRS without correcting these items, your statement becomes longer and easier to confuse.

The amended cash book solves this problem.

It asks:

Which items should the business now record in its cash book?

After those items are recorded, the Bank Reconciliation Statement asks:

Which differences still remain between the corrected cash book and the pass book?

That is the complete logic.

When Does a School Usually Expect an Amended Cash Book?

Your teacher may expect an amended cash book when the question gives clear signals such as:

• “Prepare amended cash book and Bank Reconciliation Statement”
• “Prepare adjusted cash book and then prepare BRS”
• “Ascertain the correct cash book balance”
• “Correct the cash book before preparing Bank Reconciliation Statement”
• “The following items were found on comparing the cash book with the pass book”

The strongest signal is a direct instruction. If the question says to prepare an amended cash book, prepare it.

But even when the instruction is not direct, you should notice whether the question gives cash book omissions or cash book errors. These usually point toward an amended cash book approach.

This is the key exam habit.

The Core Rule: Cash Book Items First

Use this rule:

Cash book omissions and cash book errors go to the amended cash book.
Timing differences and bank errors stay in the BRS.

This one line prevents most mistakes.

Let us understand both parts slowly.

Cash book omissions are items that the business has not recorded, but should now record after seeing the bank statement.

Examples include:

• bank charges
• interest on overdraft
• standing instruction payments
• insurance premium paid by bank
• dishonoured cheque already debited by bank
• direct deposit by customer
• interest credited by bank
• dividend or bill collected by bank

Cash book errors are mistakes in the business’s own bank column.

Examples include:

• wrong amount entered
• cheque entered twice
• payment side undercast
• receipt side overcast
• cheque deposited but omitted from cash book
• cheque issued but omitted from cash book

These are corrected in the amended cash book because the business record needs correction.

What Should Not Go Into the Amended Cash Book?

Some differences do not mean the cash book is wrong.

The most common examples are:

• cheque issued but not presented for payment
• cheque deposited but not credited by bank
• cheque sent for collection but still uncleared
• wrong debit made by the bank
• wrong credit made by the bank

These items are not corrected in the cash book because the business has already recorded them correctly, or because the mistake belongs to the bank.

Take a cheque issued but not presented. The business has already recorded the payment in the cash book. The bank has not paid it yet because the cheque has not reached the bank for payment. There is no cash book correction.

Take a cheque deposited but not credited. The business has recorded the deposit in the cash book. The bank has not credited it yet because it has not cleared. Again, there is no cash book correction.

So these items stay in the Bank Reconciliation Statement.

Think of It Like Cleaning Your Desk

Imagine your study desk has two notebooks.

One notebook is your cash book. The other is the bank statement.

Before comparing both notebooks, you first complete your own notebook. You add the missing items you now know about. You correct the wrong totals. You remove the duplicate entry.

Only after your notebook is complete do you compare it with the bank’s notebook.

That first cleaning step is the amended cash book.

The final comparison is the Bank Reconciliation Statement.

This simple picture helps because students often try to do everything inside the BRS. But amended cash book questions expect a cleaner order.

Format of an Amended Cash Book

Usually, only the bank column is needed.

The format looks like a cash book with a debit side and a credit side.

Debit side of amended cash book	Credit side of amended cash book
Opening favourable bank balance	Opening overdraft balance
Direct deposit by customer	Bank charges
Interest credited by bank	Interest on overdraft
Dividend collected by bank	Insurance premium paid by bank
Bills receivable collected by bank	Standing instruction payments
Omitted bank receipt	Dishonoured cheque or bill
Correction that increases bank balance	Omitted bank payment
Closing overdraft balance, if any	Closing favourable balance, if any

Do not memorise this table as a list of fixed words. Understand the side.

The debit side increases the bank balance in the cash book. The credit side decreases the bank balance in the cash book.

So if the item increases the business’s bank balance, place it on the debit side. If it reduces the business’s bank balance, place it on the credit side.

How to Decide the Side Quickly

Ask this:

If the business had recorded this item on time, would the bank column balance go up or down?

If it would go up, debit the amended cash book.

If it would go down, credit the amended cash book.

For example, a customer directly deposits Rs. 5,000 into the bank. The bank has credited it, but the business has not entered it. If the business records it now, bank balance in the cash book increases. So it goes on the debit side.

Bank charges of Rs. 250 are debited by the bank but not entered in the cash book. If the business records them now, bank balance in the cash book decreases. So they go on the credit side.

A Step-by-Step Method

Use the same method every time.

Step 1: Start with the given cash book balance

If the question gives a favourable balance as per cash book, write it on the debit side.

If it gives overdraft as per cash book, write it on the credit side.

Step 2: Record items missing from the cash book

Items credited by the bank but not recorded in the cash book usually go to the debit side.

Items debited by the bank but not recorded in the cash book usually go to the credit side.

Step 3: Correct cash book errors

If the error made the cash book balance too low, correct it by increasing the balance.

If the error made the cash book balance too high, correct it by reducing the balance.

Do this slowly. Errors are where students lose marks because they rush.

Step 4: Balance the amended cash book

After recording all cash book corrections, total both sides and find the balancing figure.

This balancing figure is the amended cash book balance.

Step 5: Prepare BRS using only remaining differences

Now prepare the Bank Reconciliation Statement from the amended cash book balance.

Only bring items that are still not matched, such as:

• cheques issued but not presented
• cheques deposited but not credited
• bank errors

Do not repeat the items already recorded in the amended cash book.

The Biggest Mistake: Repeating the Same Item

This is the most common mistake in amended cash book questions.

A student records bank charges in the amended cash book, then again deducts bank charges in the BRS.

That is wrong.

Once an item has been adjusted in the amended cash book, it has already changed the cash book balance. If you take it again in the Bank Reconciliation Statement, you are counting it twice.

Keep a small tick mark beside every item after placing it. If it is placed in the amended cash book, do not place it again in the BRS.

A Complete Example

Let us solve a simple question.

We will first prepare the amended cash book.

Amended Cash Book	Debit Rs.	Credit Rs.
Balance as per cash book	24,000
Direct deposit by customer	4,000
Interest credited by bank	500
Bank charges		300
Insurance premium paid by bank		1,200
Payment side undercast		200
Balance c/d		26,800
Total	28,500	28,500

So the amended cash book balance is Rs. 26,800.

Now prepare the Bank Reconciliation Statement.

Bank Reconciliation Statement	Plus Rs.	Minus Rs.
Balance as per amended cash book	26,800
Cheque issued but not presented	3,500
Cheque deposited but not credited		5,000
Balance as per pass book		25,300
Total	30,300	30,300

Notice what happened.

Bank charges, insurance, direct deposit, interest, and the cash book total error were adjusted in the amended cash book. They were not repeated in the BRS.

Only two items remained for the BRS:

• cheque issued but not presented
• cheque deposited but not credited

That is the clean amended cash book method.

Why Cheques Are Usually Left for the BRS

Students often ask why cheques are not entered in the amended cash book.

The answer depends on the wording.

If the question says “cheque issued but not presented”, the cash book has already recorded it. The bank has not recorded it yet. This is a timing difference.

If the question says “cheque deposited but not credited”, the cash book has already recorded it. The bank has not credited it yet. This is also a timing difference.

So these items stay in the BRS.

But if the question says “cheque issued but not entered in cash book”, that is different. The business forgot to record the cheque. It must be corrected in the amended cash book.

Similarly, “cheque deposited but omitted from cash book” belongs in the amended cash book.

Always read the exact phrase.

How to Handle Bank Errors

Bank errors are usually not corrected in the amended cash book.

For example:

• bank wrongly debited the account
• bank wrongly credited another customer’s cheque to this account
• bank omitted a deposit from the pass book
• bank recorded a cheque for the wrong amount

These are not mistakes in the business’s cash book. They are differences caused by the bank’s record.

So they are shown in the Bank Reconciliation Statement.

If the bank wrongly debits the account, the pass book balance becomes lower than it should be. If you start from amended cash book balance, you deduct it to reach the pass book figure shown by the bank. If the question asks for the correct pass book balance after bank correction, then read the instruction carefully.

Most school-level questions simply ask you to reconcile the balances shown on that date, so bank errors are kept in the BRS.

Favourable Balance and Overdraft

Most students first learn amended cash book with a favourable cash book balance.

A favourable balance as per cash book means the bank column has a debit balance. In simple words, the business has money in the bank.

An overdraft as per cash book means the bank column has a credit balance. In simple words, the business owes money to the bank.

The amended cash book can be prepared in both cases.

If the starting point is overdraft, write the overdraft on the credit side of the amended cash book. Then record the same corrections:

• items increasing bank balance go to debit side
• items reducing bank balance go to credit side

After balancing, you may get an amended overdraft or an amended favourable balance.

Do not panic if the balance changes sides. That can happen when direct receipts, bank charges, and corrections are large enough.

A Quick Sorting Table

Use this table for rough work.

Item in the question	Where it usually goes
Bank charges not entered in cash book	Amended cash book
Interest on overdraft not entered in cash book	Amended cash book
Insurance paid by bank, not entered in cash book	Amended cash book
Direct deposit by customer, not entered in cash book	Amended cash book
Interest credited by bank, not entered in cash book	Amended cash book
Dividend collected by bank, not entered in cash book	Amended cash book
Dishonoured cheque not entered in cash book	Amended cash book
Cash book overcast or undercast	Amended cash book
Cheque issued but not presented	Bank Reconciliation Statement
Cheque deposited but not credited	Bank Reconciliation Statement
Bank wrongly debited the account	Bank Reconciliation Statement
Bank wrongly credited the account	Bank Reconciliation Statement

This table is useful, but the sentence behind it is more important:

Correct the cash book first. Reconcile what still remains.

How to Present the Answer Neatly

Presentation matters in this chapter because one misplaced item can disturb the whole answer.

Use this order:

1. Write the heading “Amended Cash Book” with the date.
2. Put the given cash book balance on the correct side.
3. Enter only cash book omissions and cash book errors.
4. Balance the amended cash book.
5. Write the heading “Bank Reconciliation Statement” with the same date.
6. Start with amended cash book balance.
7. Enter only remaining timing differences and bank errors.
8. Write the balance as per pass book.

A neat two-stage answer is easier for your teacher to follow and easier for you to check.

Common Mistakes to Avoid

The first mistake is adjusting all items in the BRS even after preparing an amended cash book.

The second mistake is putting timing differences in the amended cash book. Cheques issued but not presented and cheques deposited but not credited usually do not correct the cash book.

The third mistake is treating bank errors as cash book errors. If the bank made the mistake, the cash book is not amended for it.

The fourth mistake is ignoring the starting balance. A debit balance as per cash book and a credit balance as per cash book are not the same thing. One is favourable, the other is overdraft.

The fifth mistake is solving from memory instead of reading the exact words. “Not entered in cash book” and “not credited by bank” do not mean the same thing.

Classify first, calculate second.

Final Way to Remember It

Think of amended cash book as the repair counter before reconciliation.

At the repair counter, you fix the business’s own record:

• missing bank charges
• direct credits
• direct payments
• dishonoured cheques
• cash book errors

After that, you go to the reconciliation bridge and explain why the corrected cash book still does not match the pass book:

• cheque issued but not presented
• cheque deposited but not credited
• bank errors

That is the whole topic.

If you can separate these two stages, amended cash book becomes one of the cleanest parts of Bank Reconciliation Statement.

Frequently Asked Questions

What is an amended cash book?

An amended cash book is the corrected bank column of the cash book. It records missing bank-related items and corrects cash book errors before preparing the Bank Reconciliation Statement.

Is amended cash book the same as Bank Reconciliation Statement?

No. The amended cash book corrects the business’s cash book. The Bank Reconciliation Statement explains the remaining difference between the corrected cash book and the pass book.

When should I prepare an amended cash book?

Prepare it when the question asks for an amended or adjusted cash book, asks for correct cash book balance, or gives items that were not entered in the cash book.

Do bank charges go in the amended cash book?

Yes, if bank charges were recorded in the pass book but not entered in the cash book. They reduce the cash book bank balance, so they are written on the credit side of the amended cash book.

Do cheques issued but not presented go in the amended cash book?

Usually, no. The cash book has already recorded those cheques. The bank has not paid them yet, so they are timing differences and are shown in the Bank Reconciliation Statement.

Do cheques deposited but not credited go in the amended cash book?

Usually, no. The cash book has already recorded the deposit. The bank has not credited it yet, so it stays in the Bank Reconciliation Statement.

What is the biggest mistake in amended cash book questions?

The biggest mistake is repeating the same item twice. If an item has already been adjusted in the amended cash book, do not take it again in the Bank Reconciliation Statement.

How can I decide whether an item belongs in the amended cash book or BRS?

Ask one question: does this item correct the business’s cash book? If yes, put it in the amended cash book. If it is only a timing difference or a bank error, put it in the Bank Reconciliation Statement.