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 business organisation introduction to financial markets concept of financial market meaning and definition of financial market concepts and functions of financial markets

A cheque is dishonored by______.

  1. non payment only.

  2. partial payment.

  3. both a & b.

  4. none of the above.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A cheque is dishonored by both non payment as well as partial payment. A cheque gets dishonored when the bank fails to pay the mentioned amount to payee. When the cheque deposited by anybody for collection or presented for payment gets refused by the bank, it is known as dishonor of cheque.

Multiple choice commercial studies accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

The rule of personal account states that Debit the receiver and Credit the giver.

  1. True

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

Personal accounts are related to individuals, firms, companies, etc. A few examples of personal accounts include debtors, creditors, banks, outstanding/prepaid accounts, accounts of credit customers, accounts of goods suppliers, capital, drawings, etc.

Natural personal accounts are the simplest to understand out of all and includes all God's creations who have ability to deal, who, in  most cases, are people. E.g. Kumar's A/c, Adam's A/c, etc.
Artificial personal accounts are created artificially by law, such as corporate bodies and institutions, are called Artificial personal accounts.
Representative personal accounts represent a certain person or group directly or indirectly.
The golden rule for personal accounts: Debit the receiver; Credit the giver.

Multiple choice commercial applications generally accepted accounting principles (gaap) distinction between accounting and book-keeping distinction between book-keeping and accounting meaning and objectives of accounting

Book keeping records monetary transactions only. 

  1. True

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

Money measurement concept says that only those transactions are recorded in the books of account which has the monetary value. 

Therefore only transactions which have the monetary value to be recorded in books. 
If there is money, there is accounting. No Money No accounting.

Multiple choice elements of accounts journal proper balancing of accounts balancing the accounts introduction to journal proper

A cheque of Rs. 2,345 issued by Miss Meena was recorded in deposit column as Rs. 2,435. To ascertain the balance as per Cash Book of Miss Meena ____________________________.

  1. Rs. 3,345 should be added to the balance as per Pass Book

  2. Rs. 2, 435 should be subtracted from the balance as per Pass Book

  3. Rs. 4,780 should be subtracted from the balance as per Pass Book

  4. Rs. 10 should be added to the balance as per Pass Book
Reveal answer Fill a bubble to check yourself
C Correct answer
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

Stamping of promissory note is not mandatory.

  1. True

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

 It held that the promissory executed in other State was liable for stamp duty in the State where it was produced, and for not paying necessary stamp duty, the document would be inadmissible. For such a contingency Section 19 of the Indian Stamp Act would apply.

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

________ is the person who makes or draws the promissory note.

  1. Maker

  2. Drawee

  3. Payee

  4. None

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

Maker or Drawer is the person who makes or draws the promissory note to pay a certain amount as specified in the promissory note. He is also called the promisor.

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

Cheque book facility is available for fixed deposit account.

  1. True

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

Fixed deposit accounts are investment vehicles where money is locked for a specific term. They do not provide cheque book facilities, which are reserved for current or savings accounts.

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 these statements is true about a Promisory note?

  1. A Promissory note cannot be made payable to the bearer

  2. A Promissory note is a conditional order to pay

  3. A Promissory note does not require stamping

  4. A Promissory note cannot be dishonoured
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Some key features of promissory notes are as follows,

  • It must be in writing
  • It must contain an unconditional promise to pay.
  • The sum payable must be certain.
  • The promissory notes must be signed by the maker.
  • It must be payable to a certain person,cannot be made payable to the bearer.
  • It should be properly stamped.

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 these is/ are essential for a valid promissory note?

  1. Writing

  2. Proper stamping

  3. Amount to be paid must be certain

  4. All the three
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

According to Negotiable Instruments Act,  1881, a promissory note is defined as an instrument in writing, containing an unconditional undertaking signed by the maker, to pay a certain sum of money only to or to the order of a certain person, or to the bearer of the instrument. The following are the features of a promissory note :

(1) It must be in writing.
(2) It must contain an unconditional promise to pay.
(3) The sum payable must be certain.
(4) It must be signed by the maker.
(5) The maker must sign it.
(6) It must be payable to a certain person.
(7) It should be properly stamped.

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 these statements is not true about a Promissory note?

  1. No notice of dishonour of Promissory note is required

  2. Dishonour of Promissory note does not required noting or protest

  3. A Promissory note cannot be made payable to the maker himself

  4. Promissory note cannot be made payable to the bearer
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
  • Notice of dishonor is a notice given by the holder of a bill of exchange or promissory note, to a drawer or indorser showing that acceptance or payment has been refused. Notice of dishonor is also known as certificate of protest or certificate of dishonor.
  • Protest for dishonour: Foreign bill of exchange must be protested for dishonour when such protest is required to be made by the law of the country where they are drawn, but no such protest is needed in the case of a promissory note.
  • A promissory note cannot be made payable the maker himself, while in a bill of exchange to the drawer and payee or drawee and payee may be same person.
  • A promissory note cannot be made payable to the bearer, no matter whether it is payable on demand or after a certain time.
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.