Commerce Accountancy · 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 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

Documentation, while developing a software for a bank, is required for

  1. correction

  2. auditihg

  3. editing

  4. all of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Documentation in bank software development serves multiple purposes: correction (fixing bugs and updates), auditing (regulatory compliance and verification), and editing (ongoing maintenance). The term 'auditihg' appears to be a typo for 'auditing.' All three purposes are valid and essential in banking software where accuracy and compliance are critical.

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.

Multiple choice

Under Section 19 for the extended period of limitation, part payment must be

  1. in the handwriting of the person making the payment

  2. in the writing signed by the person making the payment

  3. Either (1) or (2)

  4. Neither (1) nor (2)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The words of section 19 state that where payment on account of a debt or of interest on a legacy is made before the expiration of the prescribed period by the person liable to pay the debt or legacy or by his agent duly authorised in this behalf, a fresh period of limitation shall be computed from the time when the payment was made.

Multiple choice

In CCC's main entry tracing is given:

  1. At the bottom most line of the main entry card

  2. On the fresh card

  3. On the back of main entry card

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

In Classified Catalogue Code (CCC), tracing is provided on the back of the main entry card. Tracing includes additional access points like subject, author, or title tracings that help users find the item through different search approaches. This convention maximizes the utility of each catalogue card.

Multiple choice

A finds a five-hundred rupee currency note near his office. A is guilty of criminal misappropriation if he

  1. puts the currency note in his pocket

  2. puts a notice on office notice board and waits for reasonable time before using the money

  3. purchases eatables with the money as he is hungry and has no money

  4. gives the money for charity after waiting for some time allowing the owner to claim the money
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A is guilty of criminal misappropriation if he purchases eatables with the money as he is hungry and has no money. It is punishable under section 403 of the Indian Penal Code.