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 technology packaged enterprise solutions

Which statement is false about manual bank statement entry

  1. A. When you enter the bank statement manually, you enter the bank statement header and the transaction lines

  2. B. You cannot update a information in a statement if the statement has already been reconciled

  3. C. B. You can update a information in a statement even if the statement has already been reconciled

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

Option C is false because Oracle prevents updates to reconciled bank statements to maintain data integrity and audit trails. Once reconciled, statements are locked from modification. Option B correctly states you CANNOT update reconciled statements. This is a control feature preventing accidental changes to matched data.

Multiple choice technology packaged enterprise solutions

_________ report shows all transactions available for reconciliation for a specific bank account.

  1. A. Cash In transit

  2. B. Cleared transactions

  3. C. Batches available for reconciliation

  4. D. Transactions Available for Reconcilia
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The Transactions Available for Reconciliation report displays all transactions that are ready for reconciliation for a specific bank account. This report is used to identify which transactions have been processed by the bank and are available to be matched against the general ledger. Options A, B, and C refer to different reports - cash in transit, cleared transactions, and batch reports - but do not show all transactions available for reconciliation.

Multiple choice

Payment of a cheque cannot be made on a cash counter of bank if the cheque is

  1. bearer

  2. cross

  3. order

  4. All of the above

  5. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A crossed cheque bears two parallel lines across its face, indicating it cannot be encashed directly over the counter. Crossed cheques must be deposited into a bank account, and the amount is credited to the payee's account. This is a security measure to ensure payment reaches the intended recipient.

Multiple choice

What is bank draft?

  1. Letter from a bank

  2. Cheque which a bank draws itself

  3. Instruction to a banker to collect a customer's debt

  4. Instruction not to honour a stop payment

  5. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Option 2 is correct.

Multiple choice

A 'stale' cheque is the one that is

  1. over six months old

  2. over three months old

  3. cancelled by the drawer

  4. written on an account which is overdrawn

  5. convening an overdue payment
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

 A stale cheque is the one that is six months old.

Multiple choice

‘Not Negotiable’ written on a cheque crossing means

  1. the cheque cannot be paid to any one but the payee

  2. the cheque is not presented by anyone other than the payee

  3. an honest person receiving a stolen cheque is liable to repay the rightful owner

  4. the cheque must be paid into a bank

  5. none of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Multiple choice

Which of the following instruments cannot be endorsed in favour of a third party?

  1. A fixed deposit receipt

  2. A bank draft

  3. A promissory note

  4. Bill of exchange

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

Fixed deposit is not governed by Negotiable Instruments Act which deals with endorsement. Fixed deposit is payable to the depositor only either on maturity or on premature payment. As such, fixed deposit receipt cannot be endorsed in favour of a third party.

Multiple choice

Which of the following statements is/are correct with respect to debit cards?

  1. The customer need not carry his chequebook and wait until approval.
  2. The customer presents his debit card to the seller and signs 'Sale Slip'.
  3. The amount of purchase is debited to the account of the customer.

  1. 1 only

  2. 2 only

  3. Both 1 and 2

  4. All 1, 2 and 3

  5. 3 only
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

All three statements are correct about debit cards. Debit cards eliminate the need to carry chequebooks and provide instant approval (statement 1). Customers sign a sale slip when making purchases (statement 2). Purchase amounts are immediately debited from the customer's account (statement 3). This is how debit card transactions work.

Multiple choice

The cash book showed an overdraft of Rs. 3,000 as cash at bank, but the pass book made up on the same date showed that cheques of Rs. 200, Rs. 100 and Rs. 250 respectively had not been presented for payments and the cheque of Rs. 800 paid into the account had not been cleared. The balance as per the cash book will be

  1. Rs. 2,200

  2. Rs. 4,350

  3. Rs. 3,250

  4. Rs. 2,750
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Cash book overdraft = Rs. 3,000 Cheques issued but not presented for payment=  (- ) Rs. 550 (200+150+250) The cheque paid into the account had not been cleared- (+) Rs. 800 The balance as per the cash book= Rs. 3,250   

Multiple choice

While preparing a Bank Reconciliation Statement taking the balance as per Cash Book as the starting point. An under cast of withdrawal column in pass book is

  1. added

  2. subtracted

  3. not required to be adjusted

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

 An under cast of withdrawal column in pass book means the withdrawal side of the pass book is recorded short, therefore to match the Cash Book with the Pass book, we will add the same amount to Cash book.

Multiple choice

Which of the following items is to appear in the Bank Reconciliation Statement if the balance as per Amended Cash Book is taken as the starting point?

  1. Bank charges and interest charged by bank

  2. Interest allowed and direct payments by bank

  3. Direct payment by our debtors into the bank

  4. A wrong entry in the pass book
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

 If the balance as per Amended Cash Book is taken as the starting point, the wrong entry passed in the Pass book will effect the totals. 

Multiple choice

Direct payment to the third party on behalf of the account holder is initially posted in

  1. the cash book when the amount is paid by the bank

  2. the cash book when the entry is posted in the pass book

  3. the pass book when the amount is paid by the bank

  4. none of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

 Direct payment to the third party on behalf of the account holder needs to be posted in the Cash Book after the entry has been posted in the pass book.