11th NCERT Accountancy Chapter 5

The need for the preparation of a bank reconciliation statement arises to reconcile the bank balance as per the cash book with the balance as per the passbook, identifying and rectifying any discrepancies between the two accounts.

A bank overdraft occurs when the bank account balance in the cash book shows a debit balance, indicating that the account holder owes more money to the bank than is currently available in the account.

The statement 'wrongly debited by the bank' refers to an incorrect deduction made by the bank in the account holder's account. For example, if the bank mistakenly charges a fee to the account that should not have been applied, it would be considered wrongly debited by the bank.

One of the causes of difference between the bank balance as per the cash book and passbook is the time lag between when a transaction is recorded in the cash book versus when it appears in the passbook. This delay can lead to discrepancies in the balances.

A 'favourable balance as per cash book' indicates a positive balance or surplus amount in the cash book, suggesting that the entity has more funds available according to its records in comparison to what is shown in the bank passbook.