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

An electronic document is deemed to be sent

  1. when the receiver accesses the document

  2. when it leaves the senders control

  3. when the parties specify it is sent

  4. at the time that the document is last saved on an electronic form

  5. Either (1) or (3)
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

(2) An electronic document is deemed to be sent when it leaves the sender's control.

Multiple choice

Consider the following statements regarding stamp duty: (a) It affords legality to the document, i.e. it is enforceable in a court of law. (b) It is collected by the state government. (c) It is uniform in all the states of the country.

With which of the above you do not agree?

  1. Only (a)

  2. Only (b)

  3. Only (c)

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

Stamp duty comes within the jurisdiction of the state and hence, it varies from state to state.

Multiple choice

Which of the following is incorrect?

  1. The legal implication of the bank guarantee and letter of credit are the same.

  2. Bank guarantee can also take the shape of performance bond.

  3. Certification of breach is not enough in terms of bank guarantee.

  4. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

(3) Certification of breach is enough in terms of bank guarantee.

Multiple choice

A bank receives a cheque for collection from its customer. Bank gives credit before collection of the cheque. It also allows the customer to withdraw the amount. In such case, the

  1. bank is holder

  2. bank is holder for value

  3. bank becomes holder in due course

  4. bank is representative of the drawer

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

(2) Legal term for an original or any subsequent holder of a negotiable instrument who has accepted it in good-faith and has exchanged something valuable for it, i.e holder for value.

Multiple choice

When a share is issued at its nominal value where par value is payable in installments through cash and no direct record is made in Cash Book and records for Application and allotment are made seperately: Which of the following entry is wrongly recorded in the books?

  1. Bank A/c To Share Application A/c

  2. Share Allotment A/c To Share Capital A/c

  3. Bank A/c Share Allotment A/c

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

The correct entry is passed when Call Money is received as follows: Bank A/c To Share Call A/c

Multiple choice

What is a bill of exchange?

  1. It is an instrument written or oral, containing an unconditional undertaking signed by the maker to pay certain sum of money to the bearer

  2. It is an instrument in writing containing an conditional undertaking signed by the maker to pay certain sum of money to the bearer

  3. It is an instrument in writing containing an unconditional undertaking signed by the maker to pay certain sum of money to the bearer

  4. It is an instrument in writing containing an unconditional order signed by the maker to pay certain sum of money to the bearer
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

 A bill of excange is a               written document               containg a conditional undertaking               to pay a certain amount to the bearer

 

Multiple choice

A draws a bill on B for Rs. 1, 00, 000. A endorsed the bill to C. The bill return dishonored. Noting charges Rs. 1,000. B requests A to accept the amount at 2% discount by a single cheque. The cheque amount will be

  1. Rs. 98, 000

  2. Rs. 98, 980

  3. Rs. 99, 980

  4. Rs. 99, 000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

 Noting charges are to be borne by B Total Amount payable by B after dishonor = Rs 1,01,000 Discount Amount                                            = Rs (2% of 1,01,000)                                                                            = Rs 2020 Net amount payable by B                             = Rs (101000-2020)                                                                            = Rs 98,980

Multiple choice

There was difference in the bank column of cash book and pass book by Rs. 2,500. On scrutiny it was found that interest of Rs. 500 charged directly by the bank was not entered in the cash book. The same was adjusted in the cashbook before reconciliation statement. Now, in the bank reconciliation statement, this interest of Rs. 500 is to be

  1. added to the cash book balance.

  2. subtracted from the cash book balance.

  3. ignored while preparing bank reconciliation statement.

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

When bank interest charged by the bank has already been adjusted in the cash book before preparing the bank reconciliation statement, it should be ignored in the BRS. This is because the adjustment has already been made to bring the cash book balance to the correct level, and the BRS is prepared to explain the remaining differences. Options A and B would double-count the adjustment.

Multiple choice

'MICR' technology used for clearance of cheques by banks refers to

  1. Magnetic Ink Character Recognition

  2. Magnetic Intelligence Character Recognition

  3. Magnetic Information Cable Recognition

  4. Magnetic Insurance Cases Recognition
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

MICR (Magnetic Ink Character Recognition) uses special magnetically charged ink printed characters, primarily on cheques, that banks can read electronically for fast and accurate cheque clearing and processing.