Tag: meaning of passbook and cashbook

Questions Related to meaning of passbook and cashbook

State whether the following statement is True or False.
Bank charges debited by Bank increase bank balance in the Pass Book.

book keeping and accountancy banking transactions and accounts relating to cheque functions and services of modern banking meaning of passbook and cashbook journal entries for transactions through bank and for loans

  1. True

  2. False

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Correct Option: B
Explanation:

False. Bank charges debited by the bank in the pass book reduces the balance in the pass book as compared to cash book. This is because the business has not yet recorded this transaction. This difference arises only because of the difference in recording of the transaction.

State whether the following statement is True or False.
Interest credited in Pass Book is an income to the customer.

book keeping and accountancy banking transactions and accounts relating to cheque functions and services of modern banking meaning of passbook and cashbook journal entries for transactions through bank and for loans

  1. True

  2. False

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Correct Option: A
Explanation:

True. Interest credited in the pass book is an income for the customer as credited amount shows favourable balance and debited balance shows unfavourable balance in the pass book for the customer.

State whether the following statement is True or False.
Cheque deposited into the bank increases the bank balance in the cash book.

book keeping and accountancy banking transactions and accounts relating to cheque functions and services of modern banking meaning of passbook and cashbook journal entries for transactions through bank and for loans

  1. True

  2. False

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Correct Option: A
Explanation:

True. Cheque deposited into bank for collection are first received by business, and then sent to bank for collection. So the business records the transaction by debiting the bank column in the cash book as the amount is going to get added in the bank account and not as cash balance in the form of currency.

State whether the following statement is True or False.
Interest and dividend collected by the bank increases the bank balance in the pass book.

book keeping and accountancy banking transactions and accounts relating to cheque functions and services of modern banking meaning of passbook and cashbook journal entries for transactions through bank and for loans

  1. True

  2. False

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Correct Option: A
Explanation:

True. Interest and dividend are incomes of the customer which are collected by the bank on behalf of the customer. So, when money is received by the bank, the bank increase the balance in the cash book and credits the customer's account.

Direct deposit by a customer will be recorded on ___________ side of the pass book.

book keeping and accountancy banking transactions and accounts relating to cheque functions and services of modern banking meaning of passbook and cashbook journal entries for transactions through bank and for loans

  1. debit

  2. credit

  3. left hand

  4. both side

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Correct Option: B
Explanation:

The journal entry in case of direct deposit by a customer in the books of account holder is as follows :

Bank A/c. ...................Dr.
To Sundry debtor A/c
In the cash book the above entry  would be recorded on the debit side and as we know that pass book is an exact opposite record of the cash book so, direct deposit by the customer  would be recorded on the credit side of the pass book.

Interest on bank balance is recorded on __________ side of pass book.

book keeping and accountancy banking transactions and accounts relating to cheque functions and services of modern banking meaning of passbook and cashbook journal entries for transactions through bank and for loans

  1. debit

  2. credit

  3. both side

  4. any side

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Correct Option: B
Explanation:

The journal entry in case of interest on bank balance in the books of account holder is as follows :

Bank A/c. ...................Dr.
To Interest on bank balance A/c
In the cash book the above entry  would be recorded on the debit side and as we know that pass book is an exact opposite record of the cash book so, direct deposit by the customer  would be recorded on the credit side of the pass book.

A cheque returned by bank marked "NSF" means that _________.

book keeping and accountancy banking transactions and accounts relating to cheque functions and services of modern banking meaning of passbook and cashbook journal entries for transactions through bank and for loans

  1. bank can't verify your identity

  2. there are not sufficient funds in your account

  3. check has been forged

  4. check can't be cashed being illegal reconciliation-statement

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Correct Option: B
Explanation:

A cheque may be returned by the ban due to many reasons,one of them being there are no sufficient funds in the account.

When there are no sufficient funds the bank would return the cheuqe presented for payment back to the account holder and mark on the cheque "NSF" which means that there are not sufficient funds in your account.

A cheque returned by bank marked "NSF" means that __________.

book keeping and accountancy banking transactions and accounts relating to cheque functions and services of modern banking meaning of passbook and cashbook journal entries for transactions through bank and for loans

  1. bank can't verify your identify

  2. there are not sufficient funds in your account

  3. cheque has been forged.

  4. cheque can't be cashed being illegal

Show answer
Correct Option: B
Explanation:

A cheque returned by the bank marked NSF means that there are not sufficient funds in your account. This happens when the cheque presented to the bank is of an amount which is more than what is available with you in your bank at that point of time.

In other words, the bounces back and such cheque is known as a bounced cheque.

The reason for totaling at the end of the page of a journal is __________.

book keeping and accountancy banking transactions and accounts relating to cheque functions and services of modern banking meaning of passbook and cashbook journal entries for transactions through bank and for loans

  1. It makes whole system more convenient

  2. As the calculations are lengthy it is more comfortable

  3. It is a general practice

  4. All of the above

Show answer
Correct Option: D
Explanation:

All the options are correct from accounting point of view.


If the journal entries are recorded on several pages then both the amount column of each page should be totaled. The balance should be written at the end of that page. Also, the same total is to be carried forward at the beginning of the next page.

If a cheque is written by a firm and is not cancelled by the bank and returned with the month's bank statement, the firm should __________.

book keeping and accountancy banking transactions and accounts relating to cheque functions and services of modern banking meaning of passbook and cashbook journal entries for transactions through bank and for loans

  1. adjust the balance in the firm's cheque book to reflect the data that appears in the bank's records.

  2. immediately notify the bank requesting that it correct its records.

  3. consider this cheque as outstanding when preparing the bank reconciliation.

  4. Consider this cheque to be lost and issue a replacement check.

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Correct Option: C
Explanation:

If a cheque written by a firm is not cancelled by the bank and returned with the month's bank statement, the firm should consider the cheque as outstanding while preparing the bank reconciliation statement. This means that the cheque has been issued but not presented for payment. So, the firm can consider such cheque as issued ( i.e. credited in cash book) but outstanding for payment when preparing bank reconciliation statement.