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

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 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).

Multiple choice book keeping and accountancy sub-division of journal - 2 (subsidiary books) introduction, meaning, types and advantages of subsidiary books journal proper or general journal meaning and types of subsidiary books

NSZ. Ltd. makes payments to its sundry creditors through cheques and the cash discount received on these payments is recorded in the triple-columnar cash book. In the event of dishonour of any such cheques, the discount so received should be written back through - 
(i) A debit to discount column of the cash book. 
(ii) A credit discount column of the cash book. 
(iii) A credit to bank column of the cash book. 
(iv) A debit to discount account through journal proper.
(v) A credit to creditor's account through journal proper. 
Select the correct answer from the options given below- 

  1. Only (i) of the above

  2. Only (ii) of the above

  3. Both (i) & (ii) of the above

  4. Both (iv) & (v) of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

When a cheque is dishonored, the discount previously recorded must be reversed. This is done by debiting the discount account and crediting the creditor's account through the Journal Proper.

Multiple choice book keeping and accountancy sub-division of journal - 2 (subsidiary books) introduction, meaning, types and advantages of subsidiary books journal proper or general journal meaning and types of subsidiary books

A cheque of Rs.112 received from a debtor recorded twice in the cash book. When the balance as per Cash  Book is the starting 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
B Correct answer
Explanation

If a receipt was recorded twice in the Cash Book, the balance is artificially inflated. To correct this when starting from the Cash Book balance, the amount must be subtracted.

Multiple choice book keeping and accountancy sub-division of journal - 2 (subsidiary books) introduction, meaning, types and advantages of subsidiary books journal proper or general journal meaning and types of subsidiary books

A cheque of 3500 received from P. K. Jain a customer, endorsed in favour of P. C. Jain, a supplier. It is to be recorded in _________.

  1. Three Column Cash Book.

  2. Journal Proper.

  3. Bills Receivable Book.

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

An endorsement of a cheque received from a customer to a supplier does not involve the bank account directly in the books of the entity. Such transactions are recorded in the Journal Proper.

Multiple choice book keeping and accountancy sub-division of journal - 2 (subsidiary books) introduction, meaning, types and advantages of subsidiary books journal proper or general journal meaning and types of subsidiary books

A bill receivable of 1000, which was received from a debtor in full settlement for a claim of  Rs. 1100, is dishonoured. It is to be recorded in _______________.

  1. Purchases Return Book.

  2. Bills Receivable Book.

  3. Purchases Book.

  4. Journal Proper (General Journal)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The dishonour of a bill receivable is a non-routine transaction that does not fit into the special journals for sales or purchases. Therefore, it is recorded in the Journal Proper.