Tag: introduction, meaning and importance of 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

The primary book wherein the money received from head cashier and the amount of expenditure for a particular period of an organization are recorded in chronological order of dates in separate money columns of both sides, is called ______________  cash book.

  1. Analytical Petty cash book

  2. Columnar petty cash book

  3. Imprest petty cash book

  4. Single column cash book
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A columnar petty cash book is designed with separate columns on both sides to record receipts from the head cashier and various categories of small expenditures in chronological order. This layout allows for easy classification and analysis of different expense heads at the end of the period.

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

In three column cash book, when does contra entry arises?

  1. Withdrawl of cash from bank

  2. Payment to Creditors.

  3. Withdrawl of cash from bank for personal use

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

A contra entry occurs when a transaction affects both cash and bank accounts within the same cash book. Withdrawing cash from the bank for office use involves debiting the cash column and crediting the bank column, making it a contra entry. Withdrawing cash for personal use, however, is treated as drawings and is not a contra entry.

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

Which among the following are advantages of Imprest Petty Cash Book ? 

  1. Labor Minimization

  2. Determination of expenses

  3. Control over petty expenses

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

The imprest system of petty cash offers several key benefits, including reducing the workload of the head cashier (labor minimization), simplifying the tracking and determination of minor expenses, and establishing strict control over petty cash spending. Therefore, all of the listed options are genuine advantages.

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

Entry for trade discount always appears in the books of account.

  1. True

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

The discount allowed by a seller to its customers at a fixed percentage on the listed price of goods is termed as Trade discount. 

No separate entry is passed for the Trade discount, as it is deducted from the cash memo or invoice of the goods. 
If the goods sold at trade discount are returned by the customer, the amount of trade discount is again deducted from the list price of the returned goods. Generally, it is allowed to the retailers to enable them to sell the goods to their customers at list price. 
The purpose is also to increase the sales. 
It is not recorded in the books of accounts.