Tag: bank reconciliation statement

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Questions Related to bank reconciliation statement

Multiple choice elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

A bank reconciliation statement can be prepared by ___________.

  1. Partnership firm

  2. Sole proprietary concern

  3. Companies

  4. All fo the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Bank Reconciliation is a business exercise and not a compulsion by any act or rule. This reconciliation helps in knowing where is the business money going and how much is  in form of liquid cash and lying in the bank. If the balances does not tally there are possibilities of fraud or error.

Hence, be it Partnership firm, sole traders or corporate, they need to know the status of their money and bank reconciliation helps in determining it.

Multiple choice elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

A contra entry in the Cash Book means that:________.

  1. Debit must be in the Bank Account and the credit in the Cash Account

  2. Debit and credit entries are in any folio but in the Cash Book

  3. Debit and credit entries are on the same folio of the Cash Book

  4. Debit must be in the Cash Account and the credit in the Bank Account
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation
Contra entry can be:
1.Bank A/c Dr...
To Cash A/c
or
2.Cash A/c Dr...
To Bank A/c
Credit and Debit entries are both taken into consideration into the cash book and not necessarily only bank or only cash entries are reflected.

Multiple choice elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

Bank Reconciliation Statement is prepared to arrive at the Bank Balance.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

False. Bank reconciliation statement is prepared to Reconcile the balances as per cash book (bank column) and pass book (bank statement) by identifying the causes of difference between the two for a particular period. it is prepared with the objective of reconciliation and not to arrive at the bank balance.

Multiple choice elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

Bank reconciliation sometimes points to the need for adjusting entries. Invariably how should it be done?

  1. The reconciliation of the ending balance per the bank statement to the adjusted cash balance.

  2. The reconciliation of the cash balance per the company records to the adjusted cash balance.

  3. Both a and b

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

Bank statement provided by the bank shows the balance as on date.Hence, bank column of cash book might not reflect all the entries as shown in bank pass book since some entries only reflect in bank pass book.Adjustments are made in business's cash book to arrive at the final balance avaialble with the business.

Multiple choice elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

Some of the transaction that is dependent on bank statement are ____________.

  1. collection charges

  2. dividends received

  3. pre-scheduled payments 

  4. all of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
  • Collection charges are directly charged by the bank for providing specified services and this amount is charged  completely on the discretion of the bank. This amount can be recorded in the books of accounts only when we have the bank statement and not before that.
  • In case of  date of declaration of dividend and the date of actual receipt of it there would a difference so we need the bank statement for the actual  date of receipt.
  • Pre-scheduled payments are the expense bills to be paid or subscription to be paid on timely intervals. They are scheduled as per the account holders and are therefore executed by the bank automatically. To record such transactions bank statement/pass book is necessary.
Multiple choice elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

If the balance as per Cash Book and Pass Book are the same, there is no need to prepare a Reconciliation Statement.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

True. Bank reconciliation statement is prepared to reconcile the differences between the balances as per cash book and pass book. If the two balances match, then there is no need for a bank reconciliation statement.

Multiple choice elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

Bank reconciliation statement is not prepared to arrive at the bank balance.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

True. Bank reconciliation statement is prepared to reconcile the balances as per cash book (bank column) and passbook (bank statement) by identifying the causes of differences between the two for a particular period. The bank reconciliation statement is prepared with the objective of reconciling the balances and not arriving at the bank balance.

Multiple choice elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

Banks objective is to ________.

  1. collect money on behalf of client

  2. give loans to client

  3. accept deposits of clients

  4. all of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A bank is a financial institution that deals in money by lending money and accepting deposits. 

It accepts deposits from customers for a return in the form of interest and then lends this money as loans to various people who are in need of funds. It also performs other funtions such as collecting money on the behalf of it's customers or making payments on the behalf of it's customers.

Multiple choice elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

Bank reconciliation sometimes points to the need for adjusting entries. Invariably how should it be done? 

  1. The reconciliation of the ending balance per the bank statement to the adjusted cash balance.

  2. The reconciliation of the cash balance per the company records to the adjusted cash balance.

  3. Both a and b

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

Bank statement provides balance as on date. But to determine the exact balance available with the business, it is required for business to prepare bank reconciliation statement while making adjustments in the bank column of cash book.

Multiple choice elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

The purpose of preparing a Bank Reconciliation Statement is to ___________.

  1. ascertain the difference between the pass book balance and the bank statement balance

  2. correct errors in the cash book or errors in the bank statement

  3. amend the balance of the bank statement of the firm

  4. amend the balance of the cash book of the firm
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A bank reconciliation statement is a vital statement for the business.

It is prepared to reconcile the balance as per the bank pass book and the bank column of cash book. The balance as per bank column of cash book of the business does not contain all the entries and hence with the help of bank statement provided by the bank, all the errors are rectified. This gives a true picture of the balance available with the business.