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

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

Multiple choice

Bank reconciliation statement as on 30.6.2006

   
Particulars Debit Credit
Balance as per cash book 22,575
Cheque deposited but not yet realized 50,000
Cheque issued but not yet paid 30,000
Bank charges charged by the bank 1,000
Balance as per pass book 1,575
52,575 52,575

The balance to be shown in the balance sheet is

  1. Overdraft Rs. 21,575

  2. Deposit Rs. 22,575

  3. Deposit Rs. 21,575

  4. Overdraft Rs. 1,575
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The cash book should show the actual balance which should be taken as 22,575 - 1,000 for bank charges not adjusted in the cash book earlier.