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

Debit balance as per cash book is Rs. 3,000. Cheque issued but not presented for payment Rs. 500, interest collected by bank Rs. 400 and deposit by a customer directly into his bank Rs. 250. Bank reconciliation statement will show balance of ____ as per passbook.

  1. Rs. 4,150

  2. Rs. 4,000

  3. Rs. 4,500

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

Balance is required as per passbook. Thus, all of the above transactions have to be added because bank has credited interest, collected money from customer and has not debited the cheque issued yet.

3,000 + 500 + 400 + 250 = Rs. 4,150

Multiple choice

Rent due for the month of March is recorded _______ in cash book.

  1. on receipts side

  2. on payments side

  3. as contra

  4. nowhere
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A cash book is a financial journal that contains all cash receipts and payments, including bank deposits and withdrawals. In the given case, no cash is received. Hence, there will be no entry in cash book.

Multiple choice

S issued cheque worth Rs. 35,000 in March 2013 out of which cheques worth Rs. 15,000 were presented for payment after by 31st March, 2013. What amount should be added to balance as per pass book?

  1. Rs. 15,000

  2. Rs. 10,000

  3. Rs. 25,000

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

Amount deducted when cheques presented = Rs. 35,000 Rs. 15,000 cheques were not presented before the closing of the month, so Rs. 15,000 will be added back.   

Multiple choice

Bank reconciliation is a statement prepared to reconcile

  1. trial balance

  2. cash book

  3. bank account

  4. bank balance as per cash book with bank balance as per bank pass book
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Bank reconciliation book is to find if there is any mismatch in the cash book and bank pass book. If there is so, then it is useful in finding the reason of mismatch and correcting it. 

Multiple choice

Difference in Bank Balance as per Pass Book and Cash Book may arise on account of

  1. cheque issued but not presented

  2. cheque issued but dishonoured

  3. cheque deposited and credited by bank

  4. Both (1) and (2)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The first two entries create a difference between the entries made in cash book and the entries made by the bank. The third entry where the cheques have been deposited by the customer is added in the cash book and credited by bank, i.e. added in the pass book. So, this entry will not show any difference. 

Multiple choice

When preparing Bank Reconciliation Statement, if you start with balance as per Pass Book, then cheques paid by bank recorded twice in Pass Book as Rs. 1,050 will be __________.

  1. added

  2. deducted

  3. not required to be adjusted

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

Correct entry would have been subtracting the amount from the pass book, but as the amount has been recorded twice, it means the amount has been subtracted twice, so the amount will be added once to nullify the difference. 

Multiple choice business organisation import and export procedure export trade procedures and formalities of exports and imports import and export

The document containing the guarantee of a bank to honour drafts drawn on it by an exporter is called as  ________.

  1. Letter of Hypothecation

  2. Letter of Credit

  3. Bill of Lading

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

Letter of Credit is an instrument issued by bank after request made by a foreign buyer that payment will be made to the exporter i.e. the beneficiary. It is useful where buyers and sellers do not know each other personally and are separated by distance. Hence, the document containing the guarantee of a bank to honour drafts drawn on it by an exporter is called as Letter of Credit.