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

If a cheque is deposited in the bank and not yet collected by bank, the pass book will show _____ balance as compared to the cash book.

  1. lower

  2. higher

  3. equal

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

(A)       The cheque recorded in the cash book will increase cash book balance. (B)       The pass book will not show higher balance in this case. (C)       Both the books will show different balances. (D)       The transaction will show different balances.

Multiple choice

Dividend collected by banker on the behalf of customer will ______ the bank overdraft.

  1. increase

  2. decrease

  3. make no effect on

  4. sometimes make effect on
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

(A)       Dividend collected will increase the positive balance. (B)       The collection by banker will reduce bank overdraft. (C)       Dividend collected will increase the positive balance. (D)       Dividend collected will increase the positive balance.

Multiple choice

When the balance as per cash book and pass book is the same, it means that

  1. there is definitely no error in the two books.

  2. there is no error in the cash book.

  3. there is no error in the pass book.

  4. there may still be some error in the two books.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

There may still be some error which may have been compensated and the balance in the two books is the same.

Multiple choice

A BRS helps to locate the differences between

  1. cash book, cash balance and bank balance.

  2. cash book, bank balance and pass book balance.

  3. pass book balance and bank statement.

  4. All of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

It helps to detect the causes of difference between cash book and pass book balance.

Multiple choice

If a cheque issued to supplier is not presented for payment to the bank, but wrongly shown in the cash column of cash book, then

  1. pass book balance will be higher than cash book balance

  2. cash book balance will be higher than pass book balance

  3. there would be no difference in the two books

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

Since the cheque has not been presented for payment, so the bank would not subtract any amount from customer’s balance and on the other hand, no amount would be subtracted from the cash book because entry has been made in the cash column. So, there is no difference in the two books.

Multiple choice

If the interest credited in the pass book by a bank on 31st March is debited in the cash book on 1st April, then

  1. pass book balance would be higher than cash book balance.

  2. cash book balance would be higher than pass book balance.

  3. there would be no difference in the two books.

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

Since the interest is credited (added) by the bank and on the other hand, no amount is added to the cash book upto 31 March, there would be a difference in the two books.

Multiple choice

If a cheque received by a customer has not been paid to a bank, but duly entered in cash book, then

  1. passbook balance would be higher than cash book balance

  2. cash book balance would be higher than passbook balance

  3. there would be no difference in the two books

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

Since the cheque has not been deposited, the bank would not add any amount in the customer's balance, but the amount has already been added to the cash book. Hence, cash book balance would be higher than passbook balance.

Multiple choice

Balance 'due' to a customer from bank means

  1. positive balance

  2. overdraft

  3. negative balance

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

(A)       Balance due to the customer is positive balance from customer's view (B)       Overdraft is due to bank by the customer.

Multiple choice

Which of the following errors can be corrected in the adjusted cash book?

  1. Entry posted twice in the cash book.

  2. Cheques deposited but not credited by the bank.

  3. Cheques issued but not presented for payment.

  4. Wrong credit given by the bank.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The errors made in the cash book are adjusted in the adjusted cash book The errors made by the bank are not to be adjusted in the cash book

Multiple choice

The balance as per the cash book was Rs. 3,520. A cheque of Rs. 12, 000 issued to a supplier was not recorded in the cash book, while a cheque of Rs. 3, 000 was deposited but dishonoured. Find the pass book balance.

  1. Rs. 11,480 overdraft

  2. Rs. 11,480 balance

  3. Rs. 5,480 overdraft

  4. Rs. 5,480 balance
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

(A)       The entries are recorded from the angle of pass book. Balance Rs. 3, 520 - 12, 000 - 3, 000 = Rs. 11, 480 overdraft (B)       3, 520 - 12, 000 - 3, 000 = Rs. 11, 480 balance (C)       3, 520 - 12, 000 + 3, 000 = Rs. 5, 480 balance (D)       3, 520 - 12, 000 + 3, 000 = Rs. 5, 480 balance

Multiple choice

Which of the following is not a negotiable instrument?

  1. Will

  2. Cheque

  3. Promissory note

  4. Bill of exchange

Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A negotiable instrument is a written order or unconditional promise to pay a fixed sum of money on demand or at a certain time. A will is a legal declaration by which a person names one or more persons to manage his or her estate and provides for the distribution of his or her property at death.  A will is not a negotiable instrument.