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 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.

Multiple choice meaning and characteristics of negotiable instruments the negotiable instruments act, 1881 commerce

Classification of Negotiable Instruments
A promissory note, bill of exchange or cheque is payable to bearer when -. 

  1. it is expressed to be payable to a particular person

  2. it is expressed to be further transferable

  3. the only or last endorsement on the instrument is an endorsement in blank

  4. if the holder obtains it in due course
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

As per section 13 of the Negotiable Instruments Act, 1881, a “negotiable instrument” means a promissory note, bill of exchange or cheque payable either to order or to bearer. Also, the explanation (ii) of the section provides for that a promissory note, bill of exchange or cheque is payble to bearer which is expressed to be so payable or on which the only or last indorsement is an indorsement in blank.

Multiple choice meaning and characteristics of negotiable instruments the negotiable instruments act, 1881 commerce

Classification of Negotiable Instruments
A promissory note, bill of exchange or cheque drawn or made in ______ and made payable, or drawn upon any person, resident in India shall be deemed to be an inland instrument.

  1. India

  2. Outside India

  3. Undivided India

  4. None of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
According to Section 11 inland instrument means a promissory note bill of exchange, or cheque drawn or Made in India and made payable in or drawn up on any person resident in India shall be Deemed to be and inland instrument. Since a promissory note is not drawn on any person in India an inland promissory note before is one which is both Made in India and also made payable in India.

Multiple choice meaning and characteristics of negotiable instruments the negotiable instruments act, 1881 commerce

Classification of Negotiable Instruments
A promissory note, bill of exchange or cheque drawn or made in India, and made payable, or drawn upon any person, ______ shall be deemed to be an inland instrument.

  1. Resident in India

  2. Not ordinary resident in India

  3. Non-resident in India

  4. Resident outside India
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
According to Section 11 inland instrument means a promissory note bill of exchange, or cheque drawn or Made in India and made payable in or drawn up on any person resident in India shall be Deemed to be and inland instrument. Since a promissory note is not drawn on any person in India an inland promissory note before is one which is both Made in India and also made payable in India.

Multiple choice book keeping and accountancy subsidiary books - 2 petty cash book meaning, importance and components of voucher bank book and petty cash book

Journal entry on submission of accounts by the petty cashier is :-
          Petty Cash A/c               Dr.
                To Expenses A/c 

  1. True

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

When a petty cashier submits accounts, the expenses are recorded in the ledger. The entry should be Expenses A/c Dr. to Petty Cash A/c, not the reverse.

Multiple choice book keeping and accountancy subsidiary books - 2 petty cash book meaning, importance and components of voucher bank book and petty cash book

Jornal entry for recording wages expense in petty cash book is __________.
      Wages A/c        Dr.
              To Petty Cash A/c.

  1. True

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

When a petty cash payment is made for wages, the expense account (Wages) is debited and the Petty Cash account is credited to reflect the reduction in cash.

Multiple choice book keeping and accountancy subsidiary books - 2 petty cash book meaning, importance and components of voucher bank book and petty cash book

Posting in the ledger from Analytical Petty Cash Book is made at the end of the period.

  1. True

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

In an analytical petty cash book, individual transactions are recorded daily, but the totals for each expense category are posted to the main ledger at the end of the accounting period.

Multiple choice commercial studies subsidiary books - 2 petty cash book meaning, importance and components of voucher bank book and petty cash book

When using a petty cash system, the replenishment of the fund would normally include a debit to _______________.

  1. Cash.

  2. Petty Cash.

  3. Revenues.

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

Replenishment involves the main cashier giving cash to the petty cashier. The entry involves debiting the Petty Cash account (to increase it) and crediting the main Cash account.

Multiple choice commercial studies subsidiary books - 2 petty cash book meaning, importance and components of voucher bank book and petty cash book

Payments in cash of small amounts like travelling expenses, postage, carriage,etc. are recorded in the ______________.

  1. Main Cash Book

  2. Petty Cash Book

  3. Cash Budget

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

Small, frequent payments are handled through the petty cash system to keep the main cash book uncluttered and to delegate minor financial responsibilities.

Multiple choice introduction of business laws business law and contract act business studies

Maintaining petty cash book is ______.

  1. Mandatory

  2. Necessary

  3. Dependant on nature of business

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

Petty cash book - This is used to record petty expenses like postage. cartage. printing and stationery etc in the day to day business activities.
In big organisation, it is not possible to maintain petty expenses for main cashier. In small organisation the number of petty Expenses is less so such a book can be maintained by cashier. Maintaining such a book is not compulsory.
So, maintaining petty cash book is dependent on nature of business.