Tag: explain the purpose of maintaining a cash book

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Multiple choice 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

Closing balance of cash book is _____________ balance.

  1. Debit

  2. Credit

  3. Zero

  4. Either (A) or (C)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Total of the debit side of the cash book or cash A/c always exceeds its credit side because payments of a business cannot exceed the receipts amount. So, the cash book shows debit balance. When payments are exactly equal to the receipt of the business, it will show zero balance, but it can never show the credit balance. Thus, the cash book will always show debit balance or zero balance.

Multiple choice 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

Credit balance of bank account in cash book shows ______________.

  1. Overdraft

  2. Cash deposited in our bank

  3. Cash withdrawn from bank

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

The debit balance as per the cash book means the balance of deposits held at the bank. Such a balance will be a credit balance as per the passbook. Such a balance exists when the deposits made by the firm are more than its withdrawals.

Multiple choice 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

Total of the debit side of cash book is ___ than the credit side.

  1. More

  2. Equal to

  3. Less 

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

When the total of debit column of the Cash Book (Bank column) is more than the total credit column of Cash Book (Bank column), it is known as debit balance. That is, there is a favourable balance of cash deposited at the bank. When Cash Book balance is given, it is treated as debit balance.

Multiple choice 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

Credit balance shown by a bank column in cash book is ______.

  1. Cash

  2. Overdraft

  3. Cash credit

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

The debit balance as per the cash book means the balance of deposits held at the bank.

It indicates the favourable balance as per cash book or favourable balance as per the passbook. On the other hand, the credit balance as per the cash book indicates bank overdraft.

Multiple choice 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

Cash book is a _______( journal).

  1. Subsidiary 

  2. Purchase 

  3. Sales 

  4. Purchase and Sales Return
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A cash book is a subsidiary to the general ledger in which all cash transactions during a period are recorded.

Multiple choice 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

Cash book does not record the _________ transactions.

  1. Cash

  2. Purchase

  3. Credit

  4. All of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

All transactions in the cash book have two sides: debit and credit. All cash receipts are recorded on the left-hand side as a debit, and all cash payments are recorded by date on the right-hand side as a credit.

Multiple choice 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

Cash received in entered on the debit side of cash book.

  1. True

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

The recording of transactions in the cash book takes the shape of a ledger account. Receipts of cash are entered on the debit side and cash payments on the credit side, there is no need of cash account in the ledger books of a firm. 

Multiple choice 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

Cash book records transactions relating to receipts and payments.

  1. True

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

Cash book is a book in which all transactions relating to cash receipts and cash payments are recorded. It starts with the cash or bank balances at the beginning of the period. Generally, it is made on monthly basis.

Multiple choice 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

Cash purchases ________________.

  1. increase assets

  2. result in no change in the total assets

  3. decrease assets

  4. increase liability

  5. decrease liability
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A cash purchase involves exchanging one asset (cash) for another asset (such as inventory or equipment). Because one asset decreases and another increases by the exact same amount, there is no net change in total assets.