Tag: meaning and advantages 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 total amount column of the sales return books is _________________.

  1. Credited to purchases return account

  2. Debited to sales return account

  3. Credited to sales return account

  4. Debited to purchases returns account
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Sales return is an expense/contra-revenue account, which carries a normal debit balance. Therefore, at the end of a period, the total of the sales returns book is debited to the sales return account in the ledger. Individual customer accounts are credited to reduce their outstanding balances.

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

_______is the book in which all transactions concerning cash receipts and cash payments are recorded.

  1. Journal proper

  2. Cash book

  3. Sales book

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

The cash book is a specialized subsidiary book used exclusively to record all cash receipts and cash payments. Journal proper is used for transactions that cannot be recorded in any other subsidiary book, and the sales book is used only for 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

Which of the following column of the cash book is never balanced ?

  1. Cash column

  2. Bank column

  3. Discount column

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

All cash receipts and discount allowed are recorded on the debit side and all cash payments and discount received are recorded on the credit side as same in single column cash book.

Discount column is not balanced. The total of discount columns is transferred to the Profit and Loss account.

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

Contra entry appears in ______________.

  1. Purchases Returns book

  2. Cash book

  3. Journal proper

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

A contra entry occurs when a transaction affects both the cash and bank columns of a double or triple-column cash book simultaneously (such as depositing cash into the bank or withdrawing cash from the bank for office use). Because both aspects of the transaction are recorded within the same cash book, no posting to the ledger is required for these entries.

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 cash book records _______________.

  1. All cash payments

  2. All cash receipts

  3. All cash receipts and payments

  4. Cash and credit sale of goods
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The primary purpose of a cash book is to record all cash transactions, which encompass both cash receipts (on the debit side) and cash payments (on the credit side). It does not record credit transactions, which are instead recorded in other specialized subsidiary books like the sales or purchase books.

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

Admission fees received during the year should be treated ______________.

  1. As capital income

  2. As revenue income

  3. As revenue, unless the amount involved is large

  4. As capital, except for large amounts involved
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Admission fees (or entrance fees) received by non-profit organizations are generally recurring in nature as new members join regularly, so they are typically treated as revenue income. However, if the amount is exceptionally large or if the organization's policy dictates otherwise, it may be capitalized. Thus, the standard accounting practice is to treat it as revenue unless the amount involved is significantly large.

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 debit side discount column of cash book is posted to ______________.

  1. Cr. of Discount Received A/c

  2. Dr. of Discount Received A/c

  3. Cr. of Discount Allowed A/c

  4. Dr. of Discount Allowed A/c
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The debit side of the cash book records cash receipts, and any discount column on this side represents discount allowed to customers to encourage prompt payment. Since discount allowed is an expense, its total is posted to the debit (Dr.) side of the Discount Allowed Account 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

Contra entries are passed only when __________________.

  1. Simple cash book is prepared

  2. Three-column cash book is prepared

  3. Double-column cash book is prepared

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

Contra entry is passes only when Double column cash book is prepared. 

The reason for making two entries is to comply with the principle of double 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

Rent due for the month of March will appear ___________________.

  1. On the payment side of the cash book

  2. On the receipt side of the cash book

  3. Nowhere in the cash book

  4. As a contra entry
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

'Rent due' refers to outstanding rent that has not yet been paid. Since the cash book only records actual cash receipts and cash payments, outstanding or unpaid expenses do not involve any cash flow and therefore will not appear in the cash book at all.

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 column of the cash book can have credit opening or closing balance ? 

  1. Cash column

  2. Bank column

  3. Discount column

  4. (B) & (C)
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The cash column can never have a credit balance because a business cannot pay out more physical cash than it possesses. However, the bank column can have a credit balance, which represents a bank overdraft (withdrawing more money than is available in the bank account). The discount columns are merely totaled and not balanced.