Tag: recording and posting of cash transactions

Questions Related to recording and posting of cash transactions

Which of the following statements is/are true?
(i) Cash book records all cash receipts and cash payments.
(ii) Cash book records all sale and purchase transactions of goods both in cash and on credit.
(iii) Cash book records discount on cash payments
Select the correct answer from the options given below :-

elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

  1. Only (i) of the above

  2. Only (ii) of the above

  3. Only (iii) of the above

  4. Both (i) and (iii) of the above

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Correct Option: D

Cash column of a Cash-book may show a Debit or Credit Balance.

elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

  1. True

  2. False

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Correct Option: B

State with reasons whether the following statement is true or false:
The balance in the Cash Book shows net income.

elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

  1. True

  2. False

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Correct Option: B

The allowance made for promoting sales is called Cash discount.

elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

  1. True

  2. False

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Correct Option: B

State with reasons whether the following statement is true or false:
Discount account should be balanced in the Cash Book.

elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

  1. True

  2. False

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Correct Option: B

In which book does the cash sales will be recorded?

elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

  1. Cash Book

  2. Purchase Book

  3. General Journal

  4. Sales Book

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Correct Option: A
Explanation:
Cash book is a journal in which all cash receipts and payments (including bank deposits and withdrawals) are recorded first, in chronological order, for posting to general ledger. Cash book is regularly reconciled with the bank statements as an internal auditing measure. It  is used to record all the receipts and payments of cash.

At the happening of below mentioned event what will happen. A cheque is deposited with bank.

elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

  1. Bank pass book will be credited

  2. Bank pass book will be debited

  3. Bank's column in cask book is debited

  4. Bank's column in cask book is credited

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Correct Option: C

Bank does not pay interest on the following account.

elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

  1. Recurring deposit account

  2. Fixed deposit account

  3. Savings account

  4. None of the above

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Correct Option: D

In case of three column cash book, contra entry is related with _____________.

elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

  1. Cash; Discount

  2. Cash; Bank

  3. Bank; Discount

  4. None of these

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Correct Option: B
Explanation:

The entry which involves both cash and bank transactions is called contra entry.

A General Cash book acts as a __________.

elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

  1. Journal

  2. Ledger

  3. Both

  4. None

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Correct Option: C
Explanation:

A cashbook is a book of prime entry in which cash and bank transactions of business are recorded. It acts as a book of original entry and a ledger. Hence, it is both Journal and Ledger.