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

Cash book does not record _______________.

  1. Credit Purchases

  2. Credit Sales

  3. Outstanding Expenses

  4. All of these transactions.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The Cash Book is strictly reserved for recording cash and bank transactions. Credit purchases, credit sales, and outstanding expenses do not involve immediate cash flow and are therefore not recorded in the Cash Book.

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 of the following will not be considered while preparing an amended cash book?

  1. Cheques issued but not presented for payment

  2. Cheques deposited but not credited by bank

  3. Any wrong entry in the pass book

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

An amended cash book is adjusted only for correct transactions that were omitted or recorded incorrectly in the cash book. Timing differences (like unpresented or uncleared cheques) and bank errors are not adjusted in the cash book; they are only reconciled in the Bank Reconciliation Statement.

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

Accounting for partial recovery from Mr. Ram of an amount earlier written off as bad debt will be recorded in _________.

  1. journal proper (General Journal)

  2. sales book

  3. purchase&nbsp;<span>book</span>

  4. cash&nbsp;<span>book</span>
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Even a partial recovery of a previously written-off bad debt involves receiving cash. Because it is a cash receipt, it must be recorded in the Cash Book.

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

An allowance was offered for an early payment of cash will be recorded in the ___________.

  1. sales book

  2. cash&nbsp;<span>book</span>

  3. journal proper (General Journal)

  4. purchase&nbsp;<span>book</span>
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

An allowance offered for the early payment of cash is a cash discount. This transaction is recorded in the cash book, specifically in the discount column of a multi-column cash book alongside the cash receipt or payment.

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

A debit balance in the depositors Cash Book will be shown as _________.

  1. a debit balance on the Bank Statement

  2. a credit balance on the Bank Statement

  3. an overdrawn balance on the Bank Statement

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

A debit balance in the depositor's cash book represents an asset (cash at bank). In the bank's books, this same amount represents a liability to the depositor, which is shown as a credit balance on the bank statement.

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 of the following is the kind of a cash book?

  1. Single column cash book

  2. Double column cash book

  3. Three-column cash book

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

There are three common versions of the cash book: single column, double column, and triple column.The single column cash book shows only receipts and payments of cash. The double column cash book shows cash receipts and payments as well as details about bank transactions.

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

Payment done by the account holder through issuing a cheque is entered in _____________.

  1. <span>the cash book at the time of issuing the cheque</span>

  2. the cash book at the time of presenting the cheque to the bank for payment

  3. the pass book at the time of presenting the cheque to the bank for payment

  4. <span>both (a) and (c)&nbsp;</span>
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

When a cheque is issued, the account holder immediately records the payment in their cash book. The bank, however, only records this transaction in the pass book when the cheque is actually presented to the bank for payment.

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 of the following is correct?

  1. Cash book is a journal and not a ledger

  2. Cash book is a ledger and not a journal

  3. Cash book is both a journal and a ledger

  4. Cash book is neither a journal nor a ledger
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The cash book acts as both a journal and a ledger. It is a journal because transactions are recorded chronologically for the first time, and it is a ledger because it serves as the cash and bank accounts, eliminating the need for separate accounts in the ledger.

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 sales are recorded in ____________.

  1. Sales Book

  2. Cash Book

  3. Journal

  4. Purchase Book.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

All cash transactions, including cash sales, are recorded in the Cash Book. The Sales Book is reserved exclusively for recording credit sales of goods.

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

When a firm maintains a simple Cash Book, it need not maintain ____________.

  1. sales journal

  2. purchases journal

  3. general journal

  4. cash account in the ledger
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Because the Cash Book itself serves as the cash account, there is no need to maintain a separate cash account in the ledger. Other journals, such as the sales and purchases journals, must still be maintained.