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

What does CVV, the 3-digit number mentioned on the back of debit or credit card mean?

  1. Credit Value Voucher

  2. Card Verified by Visa

  3. Card Verification Value

  4. Both 1 and 2

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

The Card Verification Value (CVV*) is an extra code printed on your debit card or credit card. CVV for Visa, MasterCard and Diners is the final three digits of the number printed on the signature strip on the back of the card.

Multiple choice

A cheque is a

  1. promissory note

  2. bill of exchange

  3. hundi

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

A ‘cheque’ is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand, and it includes the electronic image of a truncated cheque and a cheque in electronic form.

Multiple choice

Who among the following is not a party to a cheque?

  1. A drawer

  2. An acceptor

  3. A drawee

  4. A payee
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The following are the parties to a cheque: A drawer: A person who draws a cheque A drawee: A banker of a drawer on whom a cheque is drawn A payee, holder, endorser and endorsee: Same as in the case of a bill

An acceptor is not a party to a cheque.

Multiple choice

A becomes surety to C for B's conduct as a manager of C's bank. Afterwards, B and C contract without A's permission that B shall become liable for one-fourth of the losses on overdraft. B allows a customer to overdraw and the bank loses a sum of money. To make good this loss, A is

  1. wholly liable

  2. not Liable

  3. liable to the extent of one-fourth

  4. liable to the extent of three-fourths
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Option (1) is incorrect: A is not liable for the loss. Option (2) is correct: A is discharged from his suretyship by the variance made without his consent and so is not liable to make good this loss. Option (3) is incorrect: A is not liable for the loss. Option (4) is incorrect: A is not liable for the loss.

Multiple choice

In the preparation of a bank reconciliation statement, if a debit balance as per the cash book is the starting point, then cheques issued, but not presented within the period, are

  1. deducted

  2. added

  3. not required to be adjusted

  4. None of these

  5. ask the customer to present immediately
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Right answer. Cheques issued, but not presented within the period, are to be added as the cash book shows a lesser balance becuase of these.

Multiple choice

Which one of the following is not a negotiable instrument?

  1. Will

  2. Promissory Note

  3. Cheque

  4. Bill of Exchange
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A Will is a testamentary document that takes effect only after the death of the testator and cannot be transferred during one's lifetime. Negotiable instruments like promissory notes, cheques, and bills of exchange are transferable instruments that represent a sum of money and can be negotiated (transferred) by delivery or endorsement. A Will lacks this essential characteristic of free transferability during the lifetime of its creator.