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 elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

Bank reconciliation statement points out _______________.

  1. credibility of the balance shown in pass book

  2. saving account

  3. fixed deposit account

  4. recurring deposit account
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A bank reconciliation statement is prepared using cash book which is prepared by the business and passbook which is prepared by the bank. When the balances of these two books are compared and reconciled, the credibility of the balances is established. Since the business prepares the cash book and the bank reconciliation statement and the passbook is prepared by the bank, the business is able to establish the credibility of the balance as per pass book which is not prepared by the business, on the basis of cash book while preparing bank reconciliation statement, which are prepared by it.

Multiple choice elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

A bank reconciliation statement is a statement prepared to reconcile.

  1. Cash balance as per cash book and bank balance as per pass book

  2. Bank balance as per cash book and bank balance as per pass book

  3. Both (A) & (B)

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

A bank reconciliation statement is a statement prepared by the business to reconcile the differences in balance as per bank column in the cash book and bank balances as per pass book (bank statement). The passbook is a copy of the customer's account with the bank and it is prepared by the bank. On the other hand, cash book is prepared by the business and bank column of cash book shows all those transactions of the business which are carried out through the bank account. So it is often, that there are differences between these two balances as they are prepared by different entities with different viewpoints which is why bank reconciliation statement is required to Reconcile these differences.

Multiple choice elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

How would deposits in transit be handled when reconciling the ending cash balance as per the bank statement to the correct adjusted cash balance?

  1. Added to the balance as per the bank statement.

  2. Subtracted from the balance as per the bank statement.

  3. Added to the balance as per company records.

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

In case of deposits in transit the entry for would have been entered in the cash book due to which the cash book balance would be higher than the pass book balance.

So, while reconciling the ending cash balance as per the bank statement to the correct adjusted cash balance, deposits in transit should be added to the balance as per the bank statement.

Multiple choice elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

________ is a statement which is prepared as on a particular date to reconcile the bank balance as per cash book with balance as per pass book by showing all causes of difference between the two.

  1. A bank statement

  2. A bank reconciliation statement

  3. Income statement

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

A bank reconciliation statement is the specific document used to explain the differences between the cash book balance and the bank passbook balance on a specific date.

Multiple choice elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

A bank reconciliation statement is prepared by.

  1. Creditors

  2. Debtors

  3. Bank

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

A bank reconciliation statement is prepared to show reconciliation of balances as per cash book and passbook by identifying the causes of differences between the two. It is prepared by the book keeper/ company accountant/ businessman/ customer as it is the responsibility of the business to present a true and fair picture of its books of accounts to its various stakeholders.

Multiple choice elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

Which of the following is not the salient feature of bank reconciliation statement?

  1. Reconciliation is done by the bankers.

  2. Reconciliation statement will help in finding the person doing any fraud.

  3. Any undue delay in the clearance of cheques will be shown up by the reconciliation.

  4. Reconciliation is done by the account holder.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A bank reconciliation statement is a statement prepared by the account holder to reconcile the differences arising between the bank balances as per pass book and the cash book.

It helps to detect any undue delay in the clearance of cheques and also to find out any cases of fraud in the business.

Multiple choice elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

A bank reconciliation statement is prepared by.

  1. The bank

  2. The bank account holder

  3. The government

  4. The user of financial statements
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A bank reconciliation statement is prepared by the one who holds an account in the bank. A bank will never prepare a bank reconciliation statement but only provides with the summary of transactions undertaken by the account holder during a given period in form of a bank pass book.

Multiple choice elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

A bank reconciliation statement is prepared to find out the causes of the difference between:

  1. The balance as shown by the cash column of the cash book with the balance shown by its bank column.

  2. The balance as shown by the cash column of the cash book with the balance shown by the pass book.

  3. The balance shown by the bank column of the cash book with the balance shown by the pass book.

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

The purpose of a bank reconciliation statement is to reconcile the bank column of the cash book with the bank passbook (or bank statement) provided by the bank.

Multiple choice elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

Which of the following are the salient features of bank reconciliation statement?

  1. Any undue delay in the clearance of cheque will be shown up by the reconciliation

  2. Reconciliation statement will help in finding the person doing'any fraud

  3. It helps in finding out the actual position of the bank balance

  4. (a), (b) and (c)

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Bank reconciliation statement is prepared to reconcile the balances as per cash book (bank balance) and pass book (bank statement) by identifying the causes of differences between the two. So, in other words, any undue delay in the clearance of the cheque will be shown. If any fraud is happening, it will show up when the balances would not match. And, it will also help us arrive at the actual position of the bank balance.

So (a), (b) and (c).

Multiple choice business organisation and correspondence banking and bank transactions nature, advantages and types of cheques bills of exchange and promissory note meaning and types of banks bills of exchange, promissory notes and hundis cheques

A ____________ is a part of the voucher which is considered as a legal evidence of depositing cash or cheque into the bank account.

  1. Acknowledgment

  2. Counterfoil

  3. Rubber stamp

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

A pay in slip is blank form given by the bank which is duly filled by the customer to deposit cash in the bank. it has 2 part one is kept with the bank and the other is given to the customer. The smaller part which is given to the customer is known as the counter foil. It acts as the only proof that the customer has deposited money in the bank either by cheque or cash because it is stamped by the bank which acts as an acknowledgement for payment.

Multiple choice business organisation and correspondence banking and bank transactions nature, advantages and types of cheques bills of exchange and promissory note meaning and types of banks bills of exchange, promissory notes and hundis cheques

The pay in slips provided by the bank do not have specific denominations mentioned for particulars of cash to be deposited.

  1. True

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

False. The pay in slips provided by the bank have specific denominations mentioned for particulars of cash to be deposited. Specific denominations are given so that customer can mention the number of denominations the customer is depositing. 

Multiple choice business organisation and correspondence banking and bank transactions nature, advantages and types of cheques bills of exchange and promissory note meaning and types of banks bills of exchange, promissory notes and hundis cheques

Entries for cash and cheque deposits affecting bank account are passed on the basis of ____________.

  1. Withdrawal slip

  2. Pay in slip

  3. Cheque

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

A pay in slip is a document that has 2 parts one is  counterfoil and the other longer part is kept with the bank. Pay in slips are serially numbered. It acts as a document of all the entries of deposits in the bank. All the deposit transactions are entered in the bank with the help of pay in slip. They are a proof of all the deposits.

Multiple choice business organisation and correspondence banking and bank transactions nature, advantages and types of cheques bills of exchange and promissory note meaning and types of banks bills of exchange, promissory notes and hundis cheques

The _____________ of a pay in slip is in the form of of the rubber stamp of the bank.

  1. Acknowledgment

  2. Folio number

  3. Counter foil

  4. Right hand side
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A pay in slip has 2 parts one being a counter foil and the other longer part which is kept with the bank. The counter foil is given to the customer which is acknowledged in a form of the rubber stamp. It is a proof that the money is been given to the bank and is being acknowledged by the bank. 

Multiple choice business organisation and correspondence banking and bank transactions nature, advantages and types of cheques bills of exchange and promissory note meaning and types of banks bills of exchange, promissory notes and hundis cheques

Amount in the bank account can be used either using _________ or the cheques.

  1. Pay in slip

  2. Withdrawal slip

  3. Counterfoil

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

A bearer cheque is just like a withdrawal slip. A bearer cheque is payable over the counter. It is transferable by mere delivery. A withdrawal slip is a slip that to be filled by the customer to withdraw money from the bank account. In both the cases money can be received over the counter. Money can be withdrawn from the customer account using both a cheque and withdrawal slip.

Multiple choice business organisation and correspondence banking and bank transactions nature, advantages and types of cheques bills of exchange and promissory note meaning and types of banks bills of exchange, promissory notes and hundis cheques

A pay in slip is a ___________form provided by the bank to facilitate the account holders to deposit money or cheques in the account.

  1. Filled

  2. Designed

  3. Semi-filled

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

A pay in slip is a blank document that is filled by the customer with all the details of the customer to deposit money in the bank account either by cash or by cheque filling all the details needed.