Economics · Banking Accounting
What is the primary reason that net debit or credit balances of Inter-Branch Adjustments are reported under Schedule 11 (Other Assets) or Schedule 5 (Other Liabilities) respectively in a bank's Balance Sheet, rather than being directly offset against each other?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Because the Banking Regulation Act, 1949, mandates them to be shown as a net figure in the Profit and Loss Account.
- 2Because these entries represent contingent liabilities which must be disclosed under Schedule 12.
- 3To adhere to the full disclosure principle and prevent the understatement of both the bank's total assets and total liabilities.✓
- 4To simplify the process of preparing the final trial balance across all branches for the central accounting office.
Correct answer
To adhere to the full disclosure principle and prevent the understatement of both the bank's total assets and total liabilities.
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