Bank Reconciliation Statement Test 5

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Bank Reconciliation Statement Test 5

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Question 1
1 / -0

Overdraft means ___________ balance of Pass Book.

A
Debit

B
Credit

C
Closing

D
Opening

Solution

A pass book will usually have a credit balance showing the amount of positive closing balance in the account. When the closing balance of the account is negative, it is referred to as overdraft. It is a situation where debit transactions in the account are more than the available balance and hence the closing balance seen is the debit balance and not a credit balance.
Question 2
1 / -0

A bank reconciliation is prepared by the ___________.

A
Bank

B
Creditors

C
Business Entity

D
Supplier

Solution

A business entity maintains cash book for recording cash and bank transactions. The cash book serves the purpose of both the cash account and the bank account. It shows the balance of both at the end of a period.
Bank also maintains an account for each customer in its book. All deposits by the customer are recorded on the credit side of his/her account. A copy of this account is regularly sent to the customer by the bank. This is called 'Pass Book' or Bank Statement.
Sometimes the bank balances as shown by the cash book and that shown by the pass book/bank statement do not match. If the balances shown by the pass book is different from the balance shown in cash book, the business entity will have to identity the causes for such difference. It becomes necessary to reconcile them and for this a statement is prepared which is called the "Bank Reconciliation Statement."
Question 3
1 / -0

A copy of customer's account in the ledger of the bank is called __________.

A
Pass Book

B
Cash Book

C
Advice

D
Balance Statement

Solution

Numerous accounts are maintained with the bank viz., current account, savings account,recurring account, etc.
A pass book with the customer is an extract from the ledger maintained by the bank comprising of all the transactions undertaken by the customers during a given period.
Question 4
1 / -0

Normally the reconciliation statement is prepared at the end of _____________.

A
a day

B
week

C
year

D
a month

Solution

Preparing a bank reconciliation statement is a tedious task. In case of large companies the reconciliation takes place on a daily basis, but in case of majority of the companies reconciliation statement is prepared at the end of the month for ease of operations.
Question 5
1 / -0

Credit balance in the pass book represents _________.

A
Overdraft

B
Bank Balance

C
Loan Borrowed

D
Nil balance

Solution

The pass book is a copy of the account statement as maintained by the bank. So if the pass book reflects a credit balance it means that the account is in the nature of a creditor/payable for the bank and it would be the opposite for the account holder.
So from the account holder's point of view he would be having a positive/favourable/bank balance in his account in both the above situations whereas for the bank it would be the opposite.
Question 6
1 / -0

Entry in debit side of bank pass book implies ____________.

A
Cash withdrawn

B
Cash/ cheque deposited in Bank

C
Business Receipts

D
Personal Receipts

Solution

When cash is withdrawn from Bank the entry for the same is as follows :
Cash A/c. ........................... Dr.
To Bank A/c.
So the bank column of the cash book would be credited with the amount withdrawn, but as the pass book is an opposite record of the cash book, in the pass book the said entry for cash withdrawal would be debited.
Question 7
1 / -0

Credit entry in pass book at any point of time means ___________.

A
Amount withdrawn from customers a/c

B
Amount deposited in customer a/c

C
Both A and B

D
None of these

Solution

The pass book is just a copy of the account statement as maintained by the bank. So if the pass book reflects a credit entry it means that the amount is in the nature of a liability/payable for the bank and it would be the opposite for the account holder. For example when a debtor directly deposits in the account holder/customer account ,the account holder's passbook would show a credit entry.
Question 8
1 / -0

Bank reconciliation is prepared by _________.

A
Sole Proprietor concern

B
Partnership firm

C
Corporate bodies

D
All the three

Solution

A Bank Reconciliation Statement is a statement prepared to reconcile/tally the differences that appear between the bank statement or passbook and the firm's cashbook so that the difference thereof is ascertained. Bank reconciliation is prepared by sole proprietor concern, partnership firm and corporate bodies as all the businesses bank reconciliation statement for the following reasons:
1. To ascertain the balance reported by the company's cashbook is the correct amount.
2. Any errors made by the bank are discovered and corrective measures are taken.
3. Discover dishonoured checks and take corrective measures.
4. To rectify any errors present in the cashbook. If these errors are carried forward, it results in an incorrect income statement as well as incorrect balance sheet.
Question 9
1 / -0

Debit entry in pass book at any point of time means _________.

A
Amount deposited by the customer

B
Amount withdrawn by the customer

C
Amount deposited in customers a/c

D
Amount withdrawn/ deducted from customers a/c

Solution

The pass book is just a copy of the account statement as maintained by the bank. So if the pass book reflects a debit entry it means that the amount is in the nature of a receivable/asset for the bank and it would be the opposite for the account holder. For example when monthly statement charges are charged by the bank to the account holder/customer account the account holder's passbook would show a debit entry.
Question 10
1 / -0

Debit balance as per pass book means ____________.

A
Bank Overdraft

B
Debit Balance in Pass Book

C
Cash Balance with Bank

D
None of these

Solution

Bank statements usually show a debit balance which indicate a positive balance. Overdrafts are where the bank account becomes negative and the businesses in effect have borrowed from the bank. In the bank statement, where the balance is followed by Dr. (or sometimes OD) means that there is an overdraft and called debit balance as per passbook. An overdraft is treated as negative figure on a bank reconciliation statement.

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Bank Reconciliation Statement Test 5

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Bank Reconciliation Statement Test 5

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Rank

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SHARING IS CARING

Question 1

Debit

Credit

Closing

Opening

Solution

Question 2

Bank

Creditors

Business Entity

Supplier

Solution

Question 3

Pass Book

Cash Book

Advice

Balance Statement

Solution

Question 4

a day

week

year

a month

Solution

Question 5

Overdraft

Bank Balance

Loan Borrowed

Nil balance

Solution

Question 6

Cash withdrawn

Cash/ cheque deposited in Bank

Business Receipts

Personal Receipts

Solution

Question 7

Amount withdrawn from customers a/c

Amount deposited in customer a/c

Both A and B

None of these

Solution

Question 8

Sole Proprietor concern

Partnership firm

Corporate bodies

All the three

Solution

Question 9

Amount deposited by the customer

Amount withdrawn by the customer

Amount deposited in customers a/c

Amount withdrawn/ deducted from customers a/c

Solution

Question 10

Bank Overdraft

Debit Balance in Pass Book

Cash Balance with Bank

None of these

Solution

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