Commerce Accountancy · General Awareness

Banking and Cash Transactions

990 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 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 were not been presented for payment and the cheque of Rs. 500, paid into the account had not been cleared. What would be the balance as per the 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

Hush money

  1. soft money

  2. easy money

  3. money given as bribe

  4. cheque
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

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Multiple choice

As per the provisions of Section 93, when a cheque is dishoroured by non-acceptance or non-payment, the holder

  1. may or may not give notice to the parties whom the holder seeks to make liable thereon

  2. must give notice to the parties whom the holder seeks to make liable

  3. must give notice to the parties whom the holder seeks to make liable, but after noting

  4. must not give any notice to anyone
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

As per the provisions of Section 93 of the Negotiable Instrument Act, when a cheque is dishoroured by non-acceptance or non-payment, the holder must give notice to the parties whom the holder seeks to make liable.

Multiple choice

Under Section 138 of the NI Act, territorial jurisdiction does not arise

  1. where the cheque is issued

  2. in the local limit where the cheque is presented in the bank

  3. where the cheque is dishonoured by the bank

  4. from where the notice to pay the amount is issued
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Section 138 of the Negotiable Instrument Act deals with the dishonour of cheque for insufficiency, etc. of funds in the account.

Multiple choice

Which of the following cheques is/are paid only through a bank account?

  1. Uncrossed cheque

  2. Crossed cheque

  3. Both crossed and uncrossed cheques

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

A crossed cheque is a cheque that has been marked to specify an instruction about the way it is to be redeemed. A common instruction is to specify that it must be deposited directly into an account with a bank and not immediately cashed by a bank over the counter.

Multiple choice

A promissory note, bill of exchange or cheque drawn or made in India, and made payable in or drawn upon any person resident in India shall be deemed to be a/an

  1. inland instrument

  2. foreign instrument

  3. native instrument

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

As defined under the Negotiable Instrument Act, a promissory note, bill of exchange or cheque drawn or made in India, and made payable in or drawn upon any person resident in India shall be deemed to be an inland instrument. 

Multiple choice

A cheque which is truncated during the course of a clearing cycle, either by the clearing house or by the bank whether paying or receiving payment, immediately on generation of an electronic image for transmission, substituting the further physical movement of the cheque in writing is called

  1. a truncated cheque

  2. a cheque in the electronic form

  3. a mirror cheque

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

A truncated cheque is a cheque which is truncated during the course of a clearing cycle, either by the clearing house or by the bank whether paying or receiving payment, immediately on generation of an electronic image for transmission, substituting the further physical movement of the cheque in writing.

Multiple choice

Which written instrument signed by the maker is a promissory note?

  1. "Mr. B, I owe you one thousand rupees."

  2. "Mr. B, I will pay you ten thousand rupees after my marriage."

  3. "Mr. B, I will pay you on demand."

  4. "Mr. B, I will pay you one thousand rupees on demand."
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A valid promissory note is a signed document containing a written promise to pay a stated sum to a specified person or the bearer at a specified date or on demand. "Mr. B, I will pay you one thousand rupees on demand" is a valid promissory note.

Multiple choice

Crossing of cheque may be

  1. general only

  2. special only

  3. general or special

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

This crossing can be made in both general and special crossing by adding the words 'account payee' or 'A/C payee only'.

Multiple choice

Which of the following statements is correct?

  1. The making of a promissory note is completed by its execution.

  2. The making of a cheque is completed by its execution.

  3. A cheque payable to a bearer is not negotiable by its delivery.

  4. A cheque payable to order is negotiable by the holder by endorsement and delivery.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Where a cheque payable to order purports to be endorsed by or on behalf of the payee, the drawee is discharged by payment in due course.

Multiple choice

A bill of exchange may be dishonoured by

  1. non-acceptance only

  2. non-payment only

  3. non-acceptance or non-payment

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

A negotiable instrument may be dishonoured by non-acceptance or non-payment. It is only the bills of exchange which may be dishonoured by non-acceptance. Of course, any type of negotiable instrument - promissory note, bill of exchange or cheque - may be dishonoured by non-payment.