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 commercial studies subsidiary books - 2 three column cash book three columnar cash book triple column cash book

Salaries due for the month will appear________.

  1. On the receipt side of the cash book

  2. On the payment side of the cash book

  3. As a contra entry

  4. Nowhere in the cash book.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Salaries due represent an outstanding liability rather than an actual cash outflow. Since the cash book only records actual receipts and payments of cash or bank transactions, an accrual does not appear in it.

Multiple choice commercial studies subsidiary books - 2 three column cash book three columnar cash book triple column cash book

In arriving at adjusted cash balance which of the following is not taken into account?

  1. Amount deposited by our customer direct into our bank account

  2. Errors in the cash book

  3. Errors in the pass book

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

An adjusted cash book is prepared to update the cash book balance for items already recorded by the bank but not yet in the cash book. Errors in the pass book are bank-side issues that are reconciled in the Bank Reconciliation Statement, not the cash book itself.

Multiple choice commercial studies subsidiary books - 2 three column cash book three columnar cash book triple column cash book

In a Three-Column cash book, which of the following is correct?

  1. Trade discount allowed is recorded on the debit side of cash book

  2. Cash discount received is recorded on the credit side of cash book

  3. Discount columns are balanced

  4. Cash discount received is recorded on the debit side of cash book
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In a three-column cash book, the discount column is used to record cash discounts. Cash discounts received are a reduction in payment, so they are recorded on the credit (payment) side of the cash book.

Multiple choice commercial studies subsidiary books - 2 three column cash book three columnar cash book triple column cash book

If the debit as well as the credit aspects of a transaction are recorded in the cash book itself, it is called ______________.

  1. An opening entry

  2. A compound entry

  3. A transfer entry

  4. A contra entry.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Contra Entry is an entry which is recorded to reverse or offset an entry on the other side of an account. If a debit entry is recorded in an account, contra entry will be recorded on the credit side and vice-versa.

Multiple choice commercial studies subsidiary books - 2 three column cash book three columnar cash book triple column cash book

Which is entered on the debit side of Cash Book?

  1. Trade discount allowed

  2. Trade discount received

  3. Cash discount allowed

  4. Cash discount received.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The debit side of the cash book records all cash receipts. Cash discount allowed is an expense associated with receiving cash from debtors, so it is recorded on the same side as the receipt.

Multiple choice commercial studies subsidiary books - 2 three column cash book three columnar cash book triple column cash book

In a three-column cash book only ______________________.

  1. Cash column and discount columns are balanced

  2. Bank column and discount columns are balanced

  3. Cash column and bank columns are balanced

  4. Cash Column, bank column and discount columns are balanced.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The cash and bank columns of triple column cash book are used as accounts and are periodically totaled and balanced just like in case of a double column cash book. The discount column is only totaled

Multiple choice commercial studies subsidiary books - 2 three column cash book three columnar cash book triple column cash book

Contra entries are passed only when _____________.

  1. Double column cash book is prepared

  2. Three-column cash book is prepared

  3. Simple cash book is prepared

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

Contra entries involve transfers between cash and bank. While they appear in three-column cash books, they are fundamentally a feature of any cash book that includes both cash and bank columns (a double column cash book).

Multiple choice commercial studies subsidiary books - 2 three column cash book three columnar cash book triple column cash book

An allowance of  50 was offered for an early payment of cash of  1,050. It will be recorded in _______________.

  1. Sales Book

  2. Purchase Book

  3. Journal Proper (General Journal)

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

The cash book records the actual cash received. The discount allowed is recorded alongside the cash receipt in the discount column of the cash book.

Multiple choice commercial studies subsidiary books - 2 three column cash book three columnar cash book triple column cash book

For keeping the bank pass book up to date the responsibility is passed on to _________.

  1. bank

  2. client

  3. creditor

  4. all of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The bank pass book is a copy of the customer's account as maintained by the bank. However, the client is responsible for reconciling their own cash book with the bank statement to ensure accuracy.

Multiple choice commercial studies subsidiary books - 2 three column cash book three columnar cash book triple column cash book

Bank sent debit advice of Rs.500 to company on overdraft. It wasn't entered in cash book. What will be the adjustment in cash book.

  1. Rs. 500 will be debited

  2. Rs. 500 will be credited

  3. Non- adjustable

  4. Rs. 1000 will be subtracted
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A debit advice from the bank indicates a reduction in the bank balance (a payment). To adjust the cash book, this must be recorded on the credit side of the bank column.

Multiple choice commercial studies subsidiary books - 2 three column cash book three columnar cash book triple column cash book

Which of the following item must be recorded in the adjusted Cash Book in order to bring it in line with the entries in the Bank statement?

  1. Bank charges

  2. An error on the Bank Statement

  3. An uncredited deposit

  4. An unpresented cheque
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Bank charges are expenses deducted directly by the bank that the business is usually unaware of until viewing the bank statement, requiring an update to the adjusted cash book. Unpresented cheques, uncredited deposits, and bank statement errors are adjusted via the bank reconciliation statement.

Multiple choice commercial studies subsidiary books - 2 three column cash book three columnar cash book triple column cash book

Which of the following would record a customer's cheque returned dishonoured?

  1. Purchases Return Book

  2. Sales Return Book

  3. Journal

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

When a cheque is dishonoured, the bank reverses the entry. The company must record this in the cash book by reversing the previous receipt (crediting the bank column).