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
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
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A credit to cash
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A credit to capital
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A debit to notes expense
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A credit to notes payable
D
Correct answer
Explanation
When a business borrows money, it receives cash (an asset) and incurs a liability. Increasing a liability requires a credit entry.
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A debit to accounts payable
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A credit to accounts payable
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A debit to cash
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A debit to accounts receivable
A
Correct answer
Explanation
Paying on account reduces a liability. Since liabilities have a normal credit balance, a decrease is recorded as a debit.
A
Correct answer
Explanation
Cash is an asset. Assets have a normal debit balance.
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After you pay your bills for the week
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after taxes and deductions
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before taxes and deductions
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before you pay your bills for the week
B
Correct answer
Explanation
Take home pay, or net pay, is the amount remaining after mandatory taxes and other payroll deductions are subtracted from gross earnings.
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Electronic Payment
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Electronic Transmission
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Direct Deposit
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Direct Transfer
C
Correct answer
Explanation
Direct deposit is a service where an employer or other payer electronically transfers funds directly into an employee's bank account.
C
Correct answer
Explanation
The present perfect tense requires the past participle of the verb. The past participle of pay is paid.