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

X is maintaining an SB account with Popular Bank and the bank wrongly credited an amount of Rs. 12500 to his account. This was entered in his pass book also. Later on when the mistake came to bank’s notice, it debited the customer’s account but did not inform the customer. Meanwhile, the customer issued a cheque on the basis of this balance, which was dishonoured by the bank.

  1. Customer can ask for damages for return of his cheque although amount was recoverable from him, had the cheque been paid.

  2. Customer cannot ask for damages as bank has only rectified the mistake.

  3. It was customer’s duty to check the pass book for bringing the error to bank’s notice. Hence, customer cannot claim any damages.

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

According to the given case, the consumer should receive compensation for the upset and inconvenience caused to him by the financial business's mistake.

Multiple choice

Z, your customer, keeps his cheque book carelessly in his briefcase. The office peon steals a cheque leaf and very cleverly forges Z’s signatures which appear exactly similar to the signatures on record of the bank and obtains the payment of the cheque. Z claims the money back from the bank. Which of these options is true in the given scenario?

  1. Bank is liable for the payment.

  2. Z, being negligent, is liable for the loss. Hence, his claim is not tenable.

  3. As signatures appear similar to the signatures on record, the bank is protected u/s 89 of NI Act.

  4. Bank and Z are equally negligent and equally liable.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A bank is supposed to keep your money safe. Yet there are a number of instances of fraudulent withdrawal of money from bank accounts. While in some cases, such fraud takes place with the connivance of the bank staff, in others, the negligence of the bank staff results in clearance of forged cheques. Whatever may be the cause, the law is clear — the bank has to take responsibility for its action in clearing a forged cheque and refund the amount illegally withdrawn from the customer's account.

Multiple choice

You will hear a recording about money. At the end of the recording, the last word or group of words has been replaced by a beep. Select the correct option to complete the recording.

  1. notes

  2. accounts

  3. drafts

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

The text is about the development of paper money. The Chinese used paper money, and bankers in Spain and Italy used bills of exchange. The Swedes are thought to be the first to use paper money in Europe. So, the missing word is: notes.

Multiple choice

Mr. Sadhu Singh gives three lakh rupees to his most loyal servant, for depositing in the bank. But, the servant turns dishonest and runs away with the amount and does not come back. What is most likely to be the immediate effect on Mr. Sadhu Singh?

  1. He may feel disappointed about his servant’s disloyalty.

  2. He may contact the police.

  3. He may repent his act of giving him so much money.

  4. He may share this matter with his friends.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Correct option is (1).

Multiple choice

Which of these cards is a plastic card issued by a bank and presented to a merchant to validate a transaction?

  1. Smart card

  2. Debit card

  3. ATM card

  4. Cheque guarantee card

  5. Affinity group card
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A cheque guarantee card was essentially an abbreviated portable letter of credit granted by a bank to a qualified depositor in the form of a plastic card that was used in conjunction with a cheque. This allowed retailers to accept cheques and providing that the retailer wrote the card number on the back of the cheque, it was signed in the retailer's presence, and the retailer verified the signature on the cheque against the signature on the card, then the cheque could not be stopped and payment could not be refused by the bank.

Multiple choice

Which system speeds up the process of collection of cheques resulting in better service to customers?

  1. MICR

  2. ECS

  3. NEFT

  4. CTS

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

Cheque truncation speeds up the process of collection of cheques resulting in better service to customers, reduces the scope for clearing-related frauds or loss of instruments in transit, lowers the cost of collection of cheques, and removes reconciliation-related and logistics-related problems, thus benefitting the system as a whole.

Multiple choice

When bill discounted with the bank is dishonoured,

  1. acceptor’s account is debited in the books of drawer

  2. bills receivable account is credited in the books of drawer

  3. bank account is debited in the books of drawer

  4. bills payable account is debited in the books of drawer
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Correct Answer: acceptor’s account is debited in the books of drawer

Multiple choice

Dishonour of cheque is recorded in

  1. double/triple column cash book

  2. sales book

  3. purchases book

  4. bills receivable book
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Receipt and dishonour of cheque should be recorded in cash book.

Multiple choice

If you start with cash book favourable balance in Bank Reconciliation Statement, which item will be added?

  1. Cheque deposited but not credited by the bank

  2. Cheque omitted to be deposited in the bank

  3. Any amount directly collected by the bank on behalf of customer but not recorded in cash book

  4. Overcast debit side of cash book
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Correct Answer: Any amount directly collected by bank on behalf of customer but not recorded in cash book