Accounting · Bank Reconciliation Statement

A manufacturing firm discovers that its main account was used to settle a bank guarantee commission of 2,00,000 rupees, which was not foreseen in the monthly budget. The accountant, while preparing the BRS, realizes that the bank statement shows this debit on the 30th of the month, but the internal approval process for the commission was only completed on the 2nd of the next month. Consequently, the Cash Book for the current month remains unadjusted for this significant outflow. This creates a discrepancy that affects the liquidity ratios of the company for the financial year-end reports. The auditor insists that the BRS must clearly differentiate this as an unrecorded item rather than a timing difference like a check in transit. Therefore, the accountant must decide whether to adjust the ledger or simply report it in the BRS. What is the most appropriate action according to the principles of the Adjusted Cash Book?