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Bank Reconciliation Statement Test 13

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Bank Reconciliation Statement Test 13
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  • Question 1
    1 / -0
    Favourable balance as per pass book means which of the following?
    Solution
    Amount deposited into bank is recorded in the bank column of cash book on the debit side, while withdrawals are recorded on the credit side.
    Bank also maintains an account of the account holder in its books of accounts. Deposits by the account holder are recorded on the credit side of the account holder's account and withdrawals are recorded on the debit side of the account holder's account. 
    When the deposits are more than the withdrawals, it will show a favourable balance as the credit is more than debit. Therefore, a credit balance is known as a favorable balance of the pass book.
  • Question 2
    1 / -0
    Which of the following will not require adjustment of the cash book balance?
    Solution
    • An error in pass book would require adjustment of the pass book balance and not the cash book balance.
    • Cheque issued but not presented for payments and cheque deposited but not cleared both these situations arise due to timing differences and would get cleared and adjusted automatically and so will not require any adjustment of the cash book balance.
  • Question 3
    1 / -0
    The proper treatment of outstanding cheques on a bank reconciliation when balance as per cash book is the starting point is   __________ .
    Solution
    In case of outstanding cheques the entry would have been entered in the cash book and so the cash book balance would be lower than the pass book balance.
    Therefore, while preparing a bank reconciliation statement when the cash book balance is the starting point, outstanding cheques should be added.
  • Question 4
    1 / -0
    Bank charges amounting to Rs 5000 was not entered in the cash book. Identify the correct adjustment in accounts:
    Solution
    Bank charges are collected by the bank for providing various services from its customers.  
    It is an expense for the company which is the customer of the bank. When the company will pay such charges to the bank, its bank balance will reduce. Thus, the bank charges will be credited in the cash book.
  • Question 5
    1 / -0
    _______ are cheques that are issued by the business but not yet presented to bank.
    Solution
    Outstanding Cheques are cheques that are issued by the business but not yet presented to bank. 
    These are those cheques against which the payment is yet to be made by the bank on the behalf of the business. They are also known as unpresented cheques.
  • Question 6
    1 / -0
    Unrepresented cheques are also referred as __________.
    Solution
    Unpresented cheques are cheques which are  written and sent to its suppliers or creditors by the company.
    The company accountant reduces the balance in the cash book, i.e.credit the cash book when these cheques are written and sent. However, the bank will record such reduction in the pass book only when the payment has been made against them i. e. they are cleared from the banks.
    Thus, they are also referred as outstanding cheques as the payment which is to be made against them is still outstanding till the time they are not cleared from the banks.
  • Question 7
    1 / -0
    Bank reconciliation statement points out __________.
    Solution
    A bank reconciliation statement is prepared to identify the causes of differences between the balance as per cash book (bank column) and the balance as per pass book (bank statement). It is prepared by taking one balance as the starting point, accommodating all the causes of differences and finally arriving at the other balance. Thus, if a person is able to arrive at the other balance correctly, it can be said that such bank reconciliation statement points out the credibility of the balance shown in the pass book.
  • Question 8
    1 / -0
    In case of an enterprise having an overdraft facility, the bank reconciliation statement treats all the cheques deposited but not cleared in the cash book to be ________.
    Solution
    Cheques deposited but not cleared are those cheques which have been received by the customer and deposited into the bank for collection. 
    This will result in debiting the cash book, thereby increasing the balance of the cash book (bank column). However, the bank will give the same effect, i.e. increase the balance in the bank account only when the cheque is cleared. This is not affected by the fact that the enterprise has an overdraft facility at the bank or not. 
    Thus, in case of an enterprise having an overdraft facility the bank reconciliation statement treats all the cheques deposited but not cleared as added.
  • Question 9
    1 / -0
    An enterprise take cash book balance as the base for preparation of bank reconciliation statement. Some of the bank charges have been put. These charges will be ___________.
    Solution
    Bank charges are charged by the bank for providing its various services. 
    It is generally first recorded in the pass book (bank statement) and then taken into account in the cash book by the accountant. While preparing the bank reconciliation statement taking cash book as the base, such bank charges will be deducted in the cash book because it has not been recorded in the cash book yet. To reach to the balance as per pass book (bank statement) correctly, we will have to take into consideration all such causes of differences which have not been taken into account in the cash book.
  • Question 10
    1 / -0
    What is true about a reconciliation Statement? It is a statement _________.
    Solution
    Bank does not send any statement like a 'reconciliation statement' but only provides a 'bank statement'/ 'bank pass book' which gives us the details of transactions undertaken during the period. In fact, bank reconciliation statement is prepared by the business, only to verify the balance as per bank column of cash book and bank statement.It is an important statement for the business.
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