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 elements of book keeping and accountancy accounting in business develop the understanding of recording of transactions in journal illustrations on journal entries types of journal entries meaning and classification of business transactions

Cash discount does not appear in the books of accounts. 

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Discounts are two types: 


Trade Discount is a discount which is allowed to the customers to promote the sales. Its allowed on list price and general discount available to all the customers.  Trade discount is not recorded in books of account. 

Cash discount is allowed to the customer to whom the goods sold on credit. Cash discount is allowed to speed up the cash collection. Its allowed to the customer if the payment is done within the specified period. Cash discount is a an indirect expenses and to be debited in profit & loss account.

Multiple choice elements of accounts origin of transactions - source documents and preparation of vouchers business transactions and source document source documents voucher and transactions

How is the date of receipt of consideration by the supplier determined?

  1. Date on which the receipt of payment is entered in the books of account

  2. Date on which the receipt of payment is credited in the bank account

  3. Earlier of (a) & (b)

  4. (a) & (b) whichever is later
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The date of receipt of consideration is generally determined as the earlier of the date the payment is entered in the books or the date the payment is credited to the bank account.

Multiple choice elements of accounts origin of transactions - source documents and preparation of vouchers business transactions and source document source documents voucher and transactions

Cash memo is used for credit purchase/sale.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Whenever goods are sold in cash, a seller prepares a cash memo and records therein details of goods sold. This memo includes quantity, rate and total amount of goods sold, along with the date of transaction. 

All cash transactions are recorded in the books of accounts on the basis of the cash memos. 
A cash memo is prepared when goods are sold for cash. 
Thus, a cash memo is given by a trader in the case of sale and it is received in the case of purchases.
Cash memos are used for cash purchases/sales in order to record the credit purchases/sales, an invoice or bills are prepared by the seller.

Multiple choice elements of book keeping and accountancy sub-division of journal - 2 (subsidiary books) explain the importance of preparing subsidiary books meaning and advantages of subsidiary books purchase book or purchase journal

The source document required for recording transactions in Purchase Return Book.

  1. Debit note

  2. Credit note

  3. Cash memo

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

When the goods are returned a debit note is prepared and is sent to the supplier with the returned goods. An original copy is sent to the supplier, informing him of the amount for which his account has been debited on account of the returned goods. A duplicate copy of the debit note becomes the source document, on the basis of which entries are recorded in the purchase return book. Thus a debit note is required for recording the transactions in the Purchase return book.

Multiple choice book keeping and accountancy accounts of 'not for profit' concerns receipts and payments receipts and payments account prepration of income and expenditure account prepration of income and expenditure account and balance sheet

Interest charged by the bank will be deducted, when the overdraft as per the Cash Book is made the starting point for making the Bank Reconciliation Statement. (True/False)

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When starting with an overdraft as per the Cash Book, items that decrease the bank balance (like interest charged by the bank) are added, not deducted, to reconcile with the Pass Book.

Multiple choice business organisation mercantile agents and account sales course of business transaction in home trade documents and procedure used in home trade home trade: agents and procedures

Which of the following is not related to "Bank Correspondence"?

  1. A letter for change of signatories

  2. A letter for stop payment

  3. Reminder letter for balance due

  4. A letter for increasing overdraft limits
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A correspondent bank is a bank that provides services on behalf of another, equal or unequal, financial institution. It can facilitate wire transfers, conduct business transactions, accept deposits, and gather documents on behalf of another financial institution.

Banking Correspondence in Business Communication. Correspondence with banks is essential for organizations. Banks also are business houses and they have to correspond with clients and customers. Banks whether Private or Public, Local or Foreign, have to face stiff competition from others.

Multiple choice business organisation mercantile agents and account sales course of business transaction in home trade documents and procedure used in home trade home trade: agents and procedures

If the payee reports that he/she has received cheques, then the seller should promptly request bank to stop payment.

  1. True

  2. False

  3. Partly true

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

A stop payment is an order by a customer of a financial institution or to a money order issuer to refuse to pay a check or draft drawn on the customer's account, and to return the draft to the depositor unpaid. 

Stop payments are used in cases where the depositor does not want the check to be paid.

Multiple choice book keeping and accountancy origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

In technical term a cash memo is called a cash voucher.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A cash memo is prepared when goods are sold or purchased for cash, i.e. cash receipts and payments. 

A cash voucher is prepared for cash purchases or sales. It serves as the source document to record entries in the cash book.
Both are Same.

Multiple choice business organisation origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents petty cash book

A document for disbursement or payment of small amount from petty cash fund is known as ___________.

  1. Payment voucher

  2. Petty receipt

  3. Petty cash voucher

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

A petty cash voucher is a document that is issued when a payment is made from a petty cash fund. A petty cash fund is created to disburse small amount of expenses that take place on a daily basis.

Multiple choice business organisation origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents petty cash book

Petty cash vouchers should be _____________ numbered.

  1. Randomly

  2. Serially

  3. Chronologically

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

A petty cash voucher is a document that is issued when a payment is made from a petty cash fund. A petty cash fund is created to disburse small amount of expenses that take place on a daily basis. Petty cash vouchers should be serially numbered for the convenience of auditing and to help in having a easy check on the transactions. 

Multiple choice business organisation origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents petty cash book

A document with the help of which a particular amount is withdrawn from the petty cash fund is known as ___________ voucher.

  1. Journal

  2. Cash

  3. Memo

  4. Receipt
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A petty cash voucher/cash voucher is a document that is issued when a payment is made from a petty cash fund. A petty cash fund is created to disburse small amount of expenses that take place on a daily basis.

Multiple choice business organisation origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents petty cash book

A cashier shall make use of ___________ vouchers to reconcile the balances of the petty cash funds.

  1. Journal

  2. Memo

  3. Receipt

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

A cash memo/ petty cash memo is a document that is used when money is being withdrawn from the petty cash fund. A petty cash fund is created to meet all the petty/small transactions that take place in the organisation on daily basis. A cashier can check the cash memo to reconcile all the transactions as they are the record to all the transactions of petty cash fund. 

Multiple choice business organisation origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents petty cash book

Cash vouchers are of ______________ types.

  1. One

  2. Two

  3. Three

  4. Four
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Cash vouchers are of two types viz. debit voucher and credit voucher. A debit voucher is prepared when cash payments are received whereas a credit voucher is prepared when cash payments are made. They are the documentary evidence for payment of cash or for receiving cash. 

Multiple choice business organisation origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents petty cash book

The two types of cash vouchers include debit vouchers and ____________ vouchers.

  1. Credit

  2. Memo

  3. Receipt

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

Cash vouchers are of two types viz. debit voucher and credit voucher. A debit voucher is prepared when cash payments are received whereas a credit voucher is prepared when cash payments are made. They are the documentary evidence for payment of cash or for receiving cash.

Multiple choice elements of accounts company accounts - redemption of debentures redemption by payment in lump sum accounting effects for redemption of debentures redemption of debentures

A check returned by bank marked "NSF" means that:

  1. Bank can't verify your identify

  2. There are not sufficient funds in your account

  3. Check has been forged

  4. Check can't be cashed being illegal
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

NSF stands for Not Sufficient Funds. It indicates that the account holder does not have enough money in their bank account to cover the amount of the check.