Commerce Accountancy ยท General Awareness

Banking and Cash Transactions

1,011 Questions

This collection covers essential concepts related to banking and cash transactions. It includes questions on outstanding cheques, petty cash, bank reconciliations, and negotiable instruments. These topics are highly relevant for accounting exams and test practical financial knowledge.

Bank reconciliation statementsCheques and noting chargesPetty cash usageNegotiable Instruments ActCash book entriesStamp Duty Act

Banking and Cash Transactions Questions

Multiple choice

A cheque of Rs. 10,000 is sent to bank, but not yet credited till the date of preparation of Bank Reconciliation Statement. When the balance as per pass book is given, and we have to calculate the balance as per cash book, Rs. 10,000 would be

  1. added in the balance as per pass book

  2. subtracted from balance as per pass book

  3. added in the balance as per cash book

  4. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

This is correct. When the cheque of Rs. 10,000 is sent to bank, the customer increases the balance in his books. But if it is not credited till the date of preparation of Bank Reconciliation, the customer has to decrease the balance by Rs 10,000. That by which the bank balance of the customer is decreased, is to be added in the balance as per pass book.

Multiple choice

Rs. 6,000 is deposited in bank by Ram from his cash in business, but is entered only in the debit side of bank column. How will the amendments made in the Two - Columnar Cash Book to rectify the mistake?

  1. Rs. 6,000 is entered in the credit side of cash column only.

  2. Rs. 6,000 is entered in the credit side of cash column, and Rs. 6,000 is entered in the debit side of bank column.

  3. Rs. 6,000 is entered in the credit side of bank column and Rs. 6,000 is entered in the debit side of cash column.

  4. Rs. 6,000 is entered in the debit side of bank column only.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

This is correct. It is a contra transaction. As the balance at bank would increase when cash is deposited, it would be entered in debit side of bank column and credit side of cash book but the credit has not been given earlier.

Multiple choice

Rakesh has made the payment to its creditor of Rs. 1,450 through cheque, but credited it as Rs. 1,540 in the bank column of his Two - Columnar Cash Book. How will Rakesh make amendments in his Two - Columnar Cash Book?

  1. Rs. 90 is entered in the debit side of bank column.

  2. Rs. 90 is entered in the credit side of bank column.

  3. Rs.1,450 is entered in the debit side of bank column.

  4. Rs. 90 is entered in the debit side of cash column.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

This is correct. As the payment of only Rs. 1,450 is made through cheque by Rakesh, the bank balance should be decreased by Rs. 1,450 but Rakesh has entered Rs. 1,540 in the credit side of bank column. Therefore, Rs. 90 is entered in excess in the credit side (Rs. 1,540 Rs. 1,450). So, Rs. 90 would be entered in the debit side to rectify the mistake made or make amendments.

Multiple choice

The cash column of the Two - Columnar Cash Book has been overcast by Rs. 2,100 from the receipts side. How to make amendments in the Two - Columnar Cash Book to rectify this mistake?

  1. Rs. 2,100 is entered in the credit side of cash column.

  2. Rs. 2,100 to be entered in the debit side of Cash Column

  3. Rs 2,100 to be entered in the credit side of Bank Column

  4. Rs 2,100 to be entered in the debit side of Bank Column
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

This is correct. The receipts side is the debit side of cash column or bank column. Hence, if the cash column is overcast by Rs. 2,100 it means that Rs. 2,100 is shown in excess in the debit side. Therefore, Rs. 2,100 is to be entered in the credit side of cash column to nullify the mistake made.

Multiple choice

The furniture is purchased for personal use of Rs. 2,000 and the payment is made through cheque. It is entered in the credit side of bank column. How to rectify this error made in the Two - Columnar Cash Book?

  1. Rs. 2,000 is entered in the debit side of bank column.

  2. No rectification is required.

  3. Rs. 2,000 is entered in the credit side of cash column.

  4. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

This is correct that no rectification is required.

The payment of furniture is made through cheque and hence the bank balance is decreased by Rs. 2,000. That by which the balance is decreased is entered in credit side of bank column. Hence, no rectification is required. It is immaterial that the furniture is purchased for personal or business use.

Multiple choice

Cheque of Rs. 20,000 was issued to our customer, but only Rs. 2,000 is entered in the Two - Columnar Cash Book. How to rectify this mistake in the Two - Columnar Cash Book, assuming that the entry is made in the correct side of the Cash Book?

  1. Rs. 18,000 is entered in the credit side of bank column.

  2. Rs. 20,000 is entered in the credit side of bank column.

  3. Rs. 18,000 is to be entered in the debit side of bank column.

  4. Rs. 18,000 is entered in the credit side of cash column.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

This is correct. The cheque of Rs. 20,000 is issued and hence our bank balance would be decreased by Rs. 20,000. So, we have to enter Rs. 20,000 in the credit side of bank column, but only Rs. 2,000 is entered in credit side of the bank column. Further Rs. 18,000 is to be entered in the credit side of bank column (Rs. 20,000 - Rs. 2,000).

Multiple choice

The receipts side of the cash book (bank column) has been undercast by Rs. 4,100. How to make amendments in the Cash Book to rectify this mistake?

  1. Rs. 4,100 is entered in the debit side of cash column.

  2. Rs. 4,100 is entered in the credit side of bank column.

  3. Rs. 4,100 is entered in the debit side of bank column.

  4. Rs. 4,100 is entered in the credit side of cash column.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

This is correct. We have undercast the debit side of bank column by Rs. 4,100 as receipts side is the debit side. Rs. 4,100 is entered less in the debit side of bank column. Therefore, Rs. 4,100 is entered in the debit side of bank column to rectify the mistake made.

Multiple choice

The interest of Rs. 500 is charged by bank, but is entered in the credit side of cash column. How to rectify this error in the Two - Columnar Cash Book?

  1. Rs. 500 is to be entered in debit side of cash column only.

  2. Rs. 500 is to be entered in the debit side of cash column and Rs. 500 is to be entered in the credit side of bank column.

  3. Rs. 500 is to be entered in the credit side of bank column only.

  4. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

This is correct.

Interest of Rs. 500 is to be entered in the credit side of bank column. But it is entered in the credit side of cash column. Hence, Rs. 500 is to be entered in its debit side to nullify it. Rs. 500, which is not entered in the credit side of bank column before would be entered in its credit side now.

Multiple choice

The salary of Rs. 10,000 is paid by cheque, but is entered on the credit side of bank column by Rs. 1, 00,000 in the Two - Columnar Cash Book. How to rectify this mistake in the Two - Columnar Cash Book assuming that the entry is made in the correct side of cash book?

  1. Rs. 90,000 is to be entered in the debit side of bank column.

  2. Rs. 90,000 is to be entered in the credit side of bank column.

  3. Rs. 90,000 is to be entered in the debit side of bank column and Rs. 90,000 is to be entered in the credit side of cash column.

  4. Rs. 90,000 is to be entered in debit side of cash column.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

This is correct. The salary is paid by cheque of Rs. 10,000. Hence, it would decrease the bank balance by Rs. 10,000. Thus, Rs. 10,000 is to be entered in the credit side of bank column, but Rs.1, 00,000 is entered in the credit side. Therefore, Rs. 90,000 is entered in excess in the credit side (Rs. 1, 00,000 - Rs. 10,000 Rs. = 90,000). So, Rs. 90,000 is to be entered in the debit side to rectify the mistake made.

Multiple choice

The bill of Rs. 2,000 received from our customer was dishonoured on due date. The bill was discounted by us before and Rs. 100 was noting charge. On the dishonour of bill, the entry was made in the credit side of bank column as Rs. 2,000. How will we make amendments in our cash book to rectify this mistake?

  1. Rs.100 is to be entered in credit side of bank column.

  2. Rs.100 is to be entered in debit side of bank column.

  3. Rs. 2,100 is to be entered in credit side of bank column.

  4. Rs.100 is to be entered in the credit side of cash column.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

This is correct. When the bill is dishonoured on due date, which was discounted before the payment of the bill due is to be made to bank along with noting charge. The amount of bill is of Rs. 2,000 and noting charge is of Rs. 100. Hence, total is (Rs. 2,000 + Rs. 100 = Rs. 2,100). So, Rs. 2,100 is to be entered in credit side of bank column, but we have entered only Rs. 2,000. Thus, further Rs. 100 is to be entered in credit side of bank column (Rs. 2,100 - Rs. 2,000 = Rs.100 )

Multiple choice

The reason for preparation of Bank Reconciliation Statement is to know the difference between which of the following?

  1. The balance as per cash column of cash book and bank column of pass book.

  2. The balance as per the bank column of both the pass book and the cash book.

  3. The balance as per the bank column of pass book and cash column of pass book.

  4. The balance as per the last entry of passbook and balance as per cash column of cash book.

  5. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Bank Reconciliation statement is statement, which reconciles balance of cash book with that of pass book bank statement, and it shows reasons for the difference between the two.

Multiple choice

The cash book showed an overdraft of Rs. 2000, but the pass book made up to the same date showed that cheque of Rs. 100, Rs. 75, Rs. 125 respectively had not been presented for payment and the cheque of Rs. 500 paid into the account had not been cleared. What will be the balance as per pass book?

  1. Rs. 1200

  2. Rs. 1800

  3. Rs. 2200

  4. Rs. 800

  5. Rs. 2000
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Credit balance as overdraft per cash book = Rs 2000, (+) cheque deposited but not cleared = Rs 500 (-) cheque deposited but not presented for payment (100 + 75 + 125) = Rs 300 Balance as per pass book = Rs 2200.

Multiple choice

If Rs. 10000 deposited in bank account was mistakenly entered twice in the cash book, what will be the correct adjustment in the cash book?

  1. Rs. 10000 will be credited to the cash book.

  2. Rs. 10000 will be debited from the cash book.

  3. Rs. 20000 will be credited to the cash book.

  4. Rs. 20000 will be debited from the cash book.

  5. No adjustment is required.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Rs 10000 will be credited in cash book as the entry has been made twice. So to balance the amount, credit entry of the same amount needs to be made.

Multiple choice

Debit balance as per cash book of Sohan Brothers Enterprises as on 31.12.1999 is Rs. 1400 cheque deposited but not cleared amounts to Rs. 100, and cheque issued but not presented of Rs. 150. The bank allowed interest amounting to Rs. 50 and collected dividend of Rs. 50 on behalf of Sohan and Brothers enterprise. What should be the balance as per pass book?

  1. Rs. 1500

  2. Rs. 1600

  3. Rs. 1650

  4. Rs. 1550

  5. Rs. 1400
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Bank Reconciliation Statement Debit balance as per cheque book Rs 1400 (-) cheque deposited but not cleared Rs 100(+) cheque issued but not presented Rs 150 (+) bank allowed interest Rs 50 (+) dividend collected on behalf of Sohan Brothers Enterprise Rs 50. Balance as per pass book Rs 1550.