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 book keeping and accountancy bill of exchange (trade bill) dishonour of a bill dishonour of bills bills of exchange advantages of bill of exchange

When a bill deposited for collection by the drawer in his bank is dishonoured, drawer has to credit _____________ A/c.

  1. Drawee

  2. Payee

  3. Bank for collection

  4. Endorsee
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When Bill sent for collection is Dishonored amount receivable from the Bank is cancelled hence Bank for Collection A/c is Credited.

Multiple choice book keeping and accountancy bill of exchange (trade bill) dishonour of a bill dishonour of bills bills of exchange advantages of bill of exchange

To record noting charges drawer _______ Cash A/c.

  1. Debits

  2. Credits

  3. No effect

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

In the books of a drawer, noting charges are neither credited nor debited. These noting charges are a loss for the drawee. Thus, he needs to debit it in his accounting book and credit cash A/c. The account of noting charges for a drawer is neither a profit nor a loss.

Multiple choice book keeping and accountancy bill of exchange (trade bill) dishonour of a bill dishonour of bills bills of exchange advantages of bill of exchange

when bill is dishonored  ___________ account is Debited along with Bill payable A/c for recording noting charges.

  1. Noting Charges A/c

  2. Cash A/c

  3. Drawer A/c

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

When a Bill of Exchange is dishonoured, in order to prove the fact, the drawer (or holder) may get the bill of exchange noted and protested through a public official known as “Notary Public” Noting is the recording of the fact of dishonour by a Notary public which becomes an evidence of dishonour.

Journal Entry :-
Noting Charges A/c Dr.
          To Bills Payable A/c.

Multiple choice book keeping and accountancy bill of exchange (trade bill) dishonour of a bill dishonour of bills bills of exchange advantages of bill of exchange

When a bill, which is presented by a bank for payment, is dishonoured, the account to be credited is ___________________.

  1. Drawer's Account

  2. Bank Account

  3. Drawee's Account

  4. Bills Payable Account
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

When a bill sent for collection is dishonored, the bank credits the drawer's account (or the collection account) to reflect the reversal of the collection process.

Multiple choice book keeping and accountancy bill of exchange (trade bill) dishonour of a bill dishonour of bills bills of exchange advantages of bill of exchange

On dishonour of a bill discounted the drawer gives credit to ________.

  1. Drawee A/c

  2. Noting charges A/c

  3. Bills receivable A/c

  4. Bank A/c
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

When a bill of exchange discounted with a bank gets dishonoured at the due date, in that case, the following entry is recorded. L.F. This entry implies that on dishonour the drawee again becomes the debtor of the drawer and bank becomes the creditor of the drawer (due to non-payment by drawee on due date)

Multiple choice book keeping and accountancy bill of exchange (trade bill) dishonour of a bill dishonour of bills bills of exchange advantages of bill of exchange

On dishonourment of a bill received through endorsement, debit is given to ________.

  1. endorser's A/c

  2. payee's A/c

  3. acceptor's A/c

  4. bills payable A/c
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

When an endorsed bill is dishonored, the drawer must debit the person from whom they received the bill (the endorser) to reverse the transaction.

Multiple choice book keeping and accountancy bill of exchange (trade bill) dishonour of a bill dishonour of bills bills of exchange advantages of bill of exchange

When noting charges are paid at the time of dishonour of the bill, the drawee always debits ______________ account. 

  1. noting charges

  2. interest

  3. both (A) and (B)

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

When bill of exchange is dishonoured then in order to prove this fact to drawer may get it noted and protested through  a public official  known as a notary  public for which it charges its fees which called noting charges.such charges are recovered from the party responsible for the dishonour and when noting charges is paid at the dishonour of the bill the drawer always debit the noting charges account the journal entry is as :-



 Bills payable A/c ......... Dr.    xx
Noting charges A/c........Dr.    xx
    To Drawer's A/c...............Cr.            xx

Multiple choice book keeping and accountancy bill of exchange (trade bill) dishonour of a bill dishonour of bills bills of exchange advantages of bill of exchange

Notary public may charge his fee from the __________.

  1. drawer

  2. drawee

  3. holder of bill of exchange

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

The notary public is hired by the holder of the bill to record the dishonor. Therefore, the holder is initially responsible for paying the notary's fee.

Multiple choice book keeping and accountancy bill of exchange (trade bill) dishonour of a bill dishonour of bills bills of exchange advantages of bill of exchange

Which of the following is correct for presenting bill through notary public?

  1. To pay fees to notary public

  2. For "bill for collection"

  3. It is just to prove that the bill has been properly presented

  4. For drawing a fresh bill
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Noting by a notary public serves as legal proof that the bill was presented for payment and was dishonored, which is necessary for legal action.

Multiple choice book keeping and accountancy bill of exchange (trade bill) dishonour of a bill dishonour of bills bills of exchange advantages of bill of exchange

Noting fee means __________.

  1. charges for noting the bill of exchange in the books of account

  2. payments made to the notary public for recording the fact of the bill getting dishonoured

  3. interest till the maturity date

  4. commission paid to the bank
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A noting fee is the payment made to a notary public for the official recording (noting) of the fact that a bill of exchange has been dishonored.

Multiple choice book keeping and accountancy bill of exchange (trade bill) dishonour of a bill dishonour of bills bills of exchange advantages of bill of exchange

When the bills is to be produced to notary public at the time of ___________.

  1. Drawing the bill

  2. Acceptance of the bill

  3. Dishonour of the bill

  4. Bills for collection
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

If there is dishonour, or fear of dishonour, the bill will be given to a public official known as “Notary Public”. The amount of noting charges is recoverable from the party which is responsible for dishonour.