Tag: meaning of passbook and cashbook

Questions Related to meaning of passbook and cashbook

Statement I:
Receipts & Payment A / c starts with the opening balance of cash in hand and at bank.
Statement II :
Income & Expenditure A / c have no opening balance.
Select the correct answer from the options given below.

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. Statement I is correct while statement II is incorrect.

  2. Both Statement I and II are incorrect.

  3. Statement II is correct while statement I is incorrect.

  4. Both Statement I and II are correct.

Show answer
Correct Option: D
Explanation:
  • Receipts and Payment A/c. is an account which record the payments done and receipts received in cash. It is similar to the cash account maintained in a business. The entries found in this account are opening balance of cash, to this the cash receipts are added and the cash payments are deducted and the remaining figure is the closing cash balance.
  • Income and Expenditure A/c. is nothing but another name for a Profit & Loss account. Income and Expenditure name is mostly used by non-business entities, but still all the principles are same as a Profit & Loss account. This account only records the expenses and income for a particular financial year and hence doesnt have any opening balance of any sorts.

The bank statement shows as overdrawn balance of Rs. 2,000. A cheque for Rs. 500 drawn in favour of a credit has not yet been presented for payment. When the creditor presents the cheque for payment, the bank balance will be ___________ .

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. Rs. 1,500

  2. Rs. 2,500

  3. Rs. 1,500 (overdrawn)

  4. Rs. 2,500 (overdrawn)

Show answer
Correct Option: D
Explanation:
When balance as per passbook is the starting point adjustments are to be made in the passbook. Unpresented cheques are the cheques which are issued to a person and he/she has not presented it for payment. In this case the cash book is credited by the cheque issued and passbook is not so the cash book balance is less than passbook, hence unpresented cheques are subtracted from the passbook balance. 
Hence balance as per pass book is negative 2000 when unpresented cheques are presented the overdrawn balance will be (2500).

Which of the following item is not be appear in the Bank Reconciliation Statement if the balance as per Amended Cash Book is taken as the starting point.

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. Uncollected cheques

  2. Unpresented cheques

  3. A wrong entry in the Pass Book

  4. A correct entry in the Pass Book but not appearing in Cash Book

Show answer
Correct Option: D
Explanation:

An amended cash book is where all the adjustments are done, the starting point being the balance as per cash book. All the errors in the cash book are adjusted in the same. Hence, a wrong entry in a pass book won't appear in a cash book as it is not an error or omission in the cash book.

Which of the following items is not to be adjusted in the Amended 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. 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.

Show answer
Correct Option: D
Explanation:

An amended cash book is where all the adjustments are done, the starting point being the balance as per cash book. All the errors in the cash book are adjusted in the same. In the given question all the errors are cash book errors or omission except a wrong entry in the pass book. This error has to be adjusted in the passbook and not the cash book.

When balance as per Cash Book is the starting point which of the following is added:

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. Uncollected Cheques

  2. Unpresented Cheques

  3. Direct payments by Bank

  4. Interest charged by Bank

Show answer
Correct Option: B
Explanation:

 Unpresented cheques must be deducted from the balance as per Bank Statement when reconciling it with Cash Book. Therefore, unpresented cheques must be added to the balance as per Cash Book when reconciling it with the Bank Statement.