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 book keeping and accountancy accounting for bills of exchange meaning, definition and characteristics of promissory note promissory note bills of exchange and promissory note nature, advantages and types of cheques

Which of the following instrument cannot be made payable to the bearer?

  1. Promissory note

  2. Bank cheques

  3. Bill of exchange

  4. Accommodation bill
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
  • Promissory Note :-  The sum should be payable to a certain person. There are only two parties to a Promissory Note, one is the maker or the payer and another one is the payee. It is not transferable and thus, the amount is not payable to the bearer.
  • A cheque which is payable to any person who presents it for payment at the bank counter is called 'Bearer cheque'.
  • When a bill of exchange is payable to bearer, it means whoever holds the bill can receive the payment due on it. 
  • “ Bearer ” means the person in possession of a bill or note which is payable to bearer. 
Multiple choice elements of accounts ledger and posting meaning of bill of exchange index of ledger, forms of ledger and process of posting posting of entries in ledger

On drawing a bill of exchange the drawer debit __________.

  1. bill receivable a/c

  2. bills A/c

  3. bills payable A/c

  4. endorsee A/c
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

When a drawer draws a bill, they create a bill receivable, which is an asset. Increasing an asset requires a debit entry to the Bills Receivable account.

Multiple choice elements of accounts ledger and posting meaning of bill of exchange index of ledger, forms of ledger and process of posting posting of entries in ledger

Bill payable book only records transactions relating to ____________.

  1. drawing of bills

  2. accepting of bills

  3. both

  4. none
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The Bills Payable book is a subsidiary book used specifically to record the details of bills accepted by the business. It tracks the obligations the business has agreed to pay at a future date.

Multiple choice elements of accounts ledger and posting meaning of bill of exchange index of ledger, forms of ledger and process of posting posting of entries in ledger

A person on whom the bills of exchange is drawn is called as ______.

  1. Drawer

  2. Drawee

  3. Payee

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

After credit purchases the Buyer has the obligation for Repayment of his debts towards seller. When a bill is drawn by the seller for a guaranteed payment he indicates the liability of the buyer to pay the bill. Hence, the buyer becomes Drawee when bill is drawn in his name.

Multiple choice elements of accounts ledger and posting meaning of bill of exchange index of ledger, forms of ledger and process of posting posting of entries in ledger

____________ is designed as a summary of information regarding a duly accepted bill received by drawer.

  1. Bill Receivable Book

  2. Bill Payable Book

  3. Cash Book

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

The Bills Receivable Book is the primary subsidiary book used to record the details of all bills received from debtors.

Multiple choice elements of accounts ledger and posting meaning of bill of exchange index of ledger, forms of ledger and process of posting posting of entries in ledger

On receipt of promissory note, the payee records in ______.

  1. Bills Receivable Book.

  2. Bills payable Book.

  3. Journal Proper.

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

When a payee receives a promissory note, it is treated as a bill receivable and recorded in the Bills Receivable Book.

Multiple choice elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

A transaction recorded on the credit side of cash book is transferred to the ledger _______________.

  1. On debit side of the account

  2. On credit side of the account

  3. Is not posted anywhere

  4. Either (a) or (b).
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Rules regarding posting of cash book are given below: (i) Transactions recorded on the debit side of cash book are posted on the credit side of accounts opened in the ledger. (ii) Transactions recorded on the credit side of the cash book are posted on the debit side of different accounts in the ledger.

Multiple choice elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

Balance of cash book is posted to the ledger ______________.

  1. In the cash account

  2. In bank account

  3. Nowhere

  4. Either (a) or (b).
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A cash book is a financial journal that contains all cash receipts and disbursements, including bank deposits and withdrawals. Entries in the cash book are then posted into the general ledger.

Multiple choice elements of accounts accounting in business journal - book of original entry purchases and sales book meaning and importance of journal

What will be journal entry when cash is withdrawn from bank for personal use?

  1. Drawings A/c debit, bank A/c credit

  2. Cash A/c debit, drawings A/c credit

  3. Bank A/c debit, drawings A/c credit

  4. Bank A/c debit, capital A/c credit
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Drawings are the amounts taken by the owner of a business for his personal use in anticipation of profit. Drawings are usually made in the form of cash, but there could be other assets or goods withdrawn by the owner for his personal use.

Journal Entry will be:-
Drawing A/c Dr. 
   To Bank A/c.

Multiple choice maths banking and taxation types of accounts banks introduction, recurring deposit accounts and calculation of interest on a fixed deposit account

What type of function is a collection of cheques in a bank?

  1. secondary

  2. primary

  3. compulsory

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

Secondary function is a collection of cheques in a bank.
The bank collects the money of the cheques through clearing section of its customers. The bank also collects money of the bills of exchange.