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
A
Correct answer
Explanation
Proving cash is a standard end-of-month procedure to ensure that the cash balance in the records matches the actual cash on hand.
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Supplies is increased
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Supplies is credited
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the balance of Supplies is decreased
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none of these
A
Correct answer
Explanation
When supplies are purchased, the Supplies asset account increases. The transaction is recorded by debiting Supplies and crediting Cash.
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debit Cash, credit Drawing
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debit Drawing, credit Cash
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debit Cash, credit Accounts Payable
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none of these
B
Correct answer
Explanation
A withdrawal by the owner decreases equity. This is recorded by debiting the Drawing account (which reduces equity) and crediting Cash (which reduces an asset).
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invoice
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sales invoice
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receipt
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memorandum
C
Correct answer
Explanation
A receipt is a document that provides written acknowledgment that cash has been received. It serves as the source document for cash receipts.
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invoice
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memorandum
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journal
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check
D
Correct answer
Explanation
A check is a written order to a bank to pay a specific amount of money from the depositor's account to the person or business named on the check.
A
Correct answer
Explanation
A receipt is used as the source document for cash received from transactions other than sales, such as owner investments or bank interest.
A
Correct answer
Explanation
A check is the standard source document for all cash payments made by a business, as it provides a clear record of the payment.
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special endorsement
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restrictive endorsement
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blank endorsement
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signed endorsement
B
Correct answer
Explanation
A restrictive endorsement, such as 'For deposit only', limits the use of the check to the specific purpose of depositing it into an account.
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memo
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deposit slip
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signature card
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check
B
Correct answer
Explanation
A deposit slip is a form provided by the bank that lists the cash and checks being deposited into an account.
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blank endorsement
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special endorsement
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restrictive endorsement
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signed endorsement
A
Correct answer
Explanation
A blank endorsement consists only of the signature of the payee on the back of the check, making it payable to anyone who holds it.
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restrictive endorsement
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blank endorsement
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special endorsement
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written endorsement
C
Correct answer
Explanation
A special endorsement, also known as an endorsement in full, specifies the person to whom the check is being transferred, effectively changing the payee.
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receipt
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check
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memo
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tape register
B
Correct answer
Explanation
A check is a formal document that orders a bank to pay a specific amount of money from a depositor's account to the person or entity named on the check.
B
Correct answer
Explanation
Check stubs and carbon copies of checks are evidence of cash payments, not cash receipts. Cash receipts are typically evidenced by cash register tapes or receipt copies.
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debiting Rent Expense and crediting Cash.
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debiting Rent Expense and crediting Accounts Payable.
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debiting Rent Expense and crediting Capital.
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debiting Cash and crediting Rent Expense.
A
Correct answer
Explanation
Paying rent increases an expense (debit Rent Expense) and decreases the asset Cash (credit Cash).
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Checks
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Currency
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Credit
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Other paper document