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

Multiple choice

Which of the following is/are contra entry transaction(s)?

  1. Cash deposited into bank credited from cash book

  2. Cash received from debtors, but deposited into bank on the next day

  3. Cash withdrawn from bank for office use

  4. Cash withdrawn from bank for personal use

  5. 1, 2 and 3
Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation

Cash deposited into bank credited from cash book, cash received from debtors, but deposited into bank on the next day and cash withdrawn from bank for office use are contra entry transactions.

Multiple choice

The noting and protesting charges are paid on

  1. acceptance of the bills of exchange

  2. drawing of the bills of exchange

  3. dishonour of the bills of exchange

  4. discounting of the bills of exchange

  5. endorsement of bills in favour of creditors by the drawer
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The noting and protesting charges are paid by the drawer on the dishonour of bills of exchange.

Multiple choice

The cheque of Rs. 85,000 issued to Ramesh has been dishonored, and has been wrongly credited to purchase return book. What would be rectifying journal entry?

  1. Bank a/c Dr. Rs. 85,000To Ramesh Rs. 85,000

  2. Bank a/c Dr. Rs. 85,000To Purchase Return a/c Rs. 85,000

  3. Purchase Return a/c Dr. Rs. 85,000To Ramesh a/c Rs. 85,000

  4. Purchase return a/c Dr. Rs. 85,000To cheque issued but not Rs. 85,000presented for payment a/c

  5. Ramesh Dr. Rs. 85,000To Purchase Return a/c Rs. 85,000
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation
The correct entry is The wrong entry is
--- ---
Ramesh a/c   Dr.
Rs. 85,000
           Bank a/c        Dr
Rs. 85,000
To Bank a/c
Rs. 85,000
To   Purchase Return a/c
Rs. 85,000

The rectifying Entry is

| | | | |
Purchase Return a/c
|
Dr. Rs. 85,000
| | | |
To Ramesh
|
Rs. 85,000
|  | |

The correct option is (3).

Multiple choice

After Jenny deposited s dollars into her savings account, she had d dollars in the account. After that, if she withdrew (s - 70) dollars from this account, how many dollars did she have in her account?

  1. d - s - 70

  2. d - s + 70

  3. d + s - 70

  4. d - s

  5. d - 70
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The first bit of information is in fact irrelevant. What the second bit says is that from an account which had d dollars, she withdrew (s - 70) dollars. So, what will be left behind is d - (s - 70) = d - s + 70 dollars.

Multiple choice

A bearer cheque is issued by one Mr. Ashok in favour of Aman, but he forgets to hand over the cheque to Aman. Aman however, picks up the cheque in his absence from his table.

Whether the negotiation has taken place?

  1. No, endorsement is also needed

  2. No, delivery is also needed

  3. No, endorsement and delivery both required

  4. Yes, the cheque is drawn in his favour
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

(2) Delivery of the cheque is foremost requirement. Delivery is also needed

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