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

One outgoing cheque of Rs. 112 was recorded twice in the Cash Book. When the balance as per Cash Book is the straight point.

  1. Rs. 112 to be added

  2. Rs. 112 to be subtracted

  3. No adjustment is required

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

Recording a payment twice in the cash book reduces the balance by double the amount. To correct this when starting from the cash book balance, the extra amount must be added back.

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

One outgoing cheque of Rs. 112 recorded as Rs. 121 in the cash column is the Cash Book. (Note: The cheque was presented in the bank). When the balance as per Cash Book is the straight point.

  1. Rs. 112 to be subtracted

  2. Rs. 121 to be subtracted

  3. Rs. 9 to be added

  4. Rs. 112 to be added
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The cash book was credited for 121 instead of 112, meaning the cash book balance was reduced by 9 more than it should have been. To reconcile from the cash book, the difference of 9 should be added, but since the bank actually paid 112, the net adjustment requires subtracting the original 112 to align with the bank's actual deduction.

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

A cheque received from a debtor for Rs. 112 deposited but omitted to be recorded in the cash column in the cash-Book (Note: Bank has collected and  credited this cheque)
When the balance as per Cash Book is the starting point. 

  1. Rs. 112 to be added

  2. Rs. 121 to be added

  3. Rs. 9 to be subtracted

  4. Rs. 112 to be subtracted
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The bank collected the money, but it was not recorded in the cash book. Therefore, the bank balance is higher than the cash book balance. To reconcile from the cash book, the amount must be added.

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

In triple column cash book, cash withdrawn from bank for office use will appear in ___________.

  1. Debit side of the cash book only

  2. Both sides of the cash book

  3. Credit side of the cash book only

  4. Credit side of the bank account
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Cash withdrawn from bank for official use will give two effects in cash book. Cash book is carrying cash and bank both columns. Hence withdrawal of cash from bank reduces the bank balance and increases the cash balance. 

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

Excess of bank withdrawal over bank deposits __________.

  1. Overdraft

  2. Cash balance

  3. Bank balance

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

The opening cash and bank balances are recorded on the debit side of the cash book. Sometimes a businessman withdraws excess amount from the bank (from his bank account) and the closing bank balance of a month is a credit balance. This balance amount is called 'Bank Overdraft'. It is written on the credit side of the bank column of the cash book as opening balance.

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

A cash book written in local language by Munimji to record all types of transaction.

  1. Cash book

  2. Petty cash book

  3. Conventional Cash book

  4. Modern cash book
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A conventional cash book is the traditional form used for recording all cash transactions, often maintained in local languages or traditional formats by bookkeepers.

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

A three-column Cash Book will disclose a bank overdraft when there is __________.

  1. debit balance of cash column

  2. credit balance of cash column

  3. debit balance of bank column

  4. credit balance of bank column
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

An overdraft occurs when the bank balance is negative. In a three-column cash book, a negative bank balance is represented by a credit balance in the bank column.

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. all of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Contra entries require both a cash column and a bank column to be present in the same book, which is a feature of a double-column or three-column cash book.

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

Which of the following will be recorded as Contra Entry?

  1. Withdrew from bank for personal use

  2. A cheque received from X lodged into bank on the same day

  3. A cheque received from Y a week earlier lodged into bank

  4. A customer directly deposited the money in our bank account
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A contra entry occurs when a transaction affects both the cash and bank columns of the cash book. Depositing a cheque received earlier into the bank involves moving funds from 'cash in hand' (or cash transit) to the bank account, which is a contra entry.

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.