The false statement is when Bank Reconciliation Statement is initiated with a favorable balance (debit) as per the cash book, the check deposited but not cleared will be added. A bank reconciliation statement is a document that compares the cash balance on a companys balance sheet to the corresponding amount on its bank statement. Reconciling the two accounts helps identify whether accounting changes are needed. Bank reconciliations are completed at regular intervals to ensure that the companys cash records are correct. They also help detect fraud and any cash manipulations. Important PointsA bank reconciliation statement can be prepared by taking the balance as per the cash book or balance as per the passbook as a starting point. In the above question, Bank Reconciliation Statement is initiated with a favorable balance (debit) as per the cash book. So, here we have to make/adjust our cashbook movements while drawing BRS, in case of cheque deposited but not cleared, what we did is we added the amount of cheque to our CASHBOOK, since the cheque was not cleared we have to deduct the amount back from our cashbook. Therefore, option no. 4 is incorrect.