Tag: cash book and bank related transactions

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Questions Related to cash book and bank related transactions

Multiple choice organisation of commerce and management cash book and bank related transactions objectives and importance of bank reconciliation statement meaning of petty cash book bank balance, bank overdraft, meaning, and bank reconciliation statement

Bank Reconciliation statement is prepared by: 

  1. Bank

  2. Customer of bank

  3. Creditors of a business

  4. Neither of the three
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A Bank Reconciliation Statement is a document prepared by the account holder (the business) to reconcile their internal records (Cash Book) with the bank's records (Pass Book).

Multiple choice organisation of commerce and management cash book and bank related transactions objectives and importance of bank reconciliation statement meaning of petty cash book bank balance, bank overdraft, meaning, and bank reconciliation statement

The debit balance of Rs. 112 as on the previous day was brought forward as a credit balance of Rs.121 in a Cash Book. When the balance as per Cash Book is the starting point __________ .

  1. Rs. 112 to be added

  2. Rs. 121 to be added

  3. Rs. 233 to be added

  4. Rs. 233 to be subtracted
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The cash book was supposed to show a debit of 112 but shows a credit of 121. The difference is 112 + 121 = 233. Since the balance was recorded as a credit instead of a debit, the cash book is understated by 233, so it must be added to reconcile.

Multiple choice organisation of commerce and management cash book and bank related transactions objectives and importance of bank reconciliation statement meaning of petty cash book bank balance, bank overdraft, meaning, and bank reconciliation statement

Which of the following items is to be appear in the Bank Reconciliation Statement if the balance as per Amended Cash Book is taken as the starting point:

  1. Bank Charges and Interest charged by Bank

  2. Interest allowed and Direct Payments by Bank

  3. Direct Payment by our Debtors into the bank

  4. A wrong entry in the Pass Book
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

When using an Amended Cash Book, all standard timing differences (like bank charges or direct payments) are already adjusted in the cash book. A wrong entry in the Pass Book is an error made by the bank, which must be adjusted in the BRS.