Bank Reconciliation Statement Test

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Bank Reconciliation Statement Test - 14

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Question 1
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 2
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 3
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 4
1 / -0

Non-reconciliation of bank balance will result in _______.

A
non-reflection of true balance of cash with bank

B
non-disclosure of true and fair view of profit and loss a/c

C
tax avoidance

D
all the three

Solution

A bank reconciliation statement is a document that matches the cash balance on a company's books to the corresponding amount on its bank statement. Reconciling the two accounts helps to determine if accounting changes are needed. Bank reconciliation are completed at regular intervals to ensure that the company's cash records are correct. They also help detect fraud and any cash manipulations. The reasons for the difference between the balance on the bank statement and the balance on the books include outstanding checks, deposits in transit, bank service charges, check printing charges, errors on the books, errors by the bank, electronic charges on the bank statement not yet recorded on the books, and electronic deposits on the bank statement that are not yet recorded on the books. Non-reconciliation of bank balance results in non-reflection of true balance of cash with bank.
Question 5
1 / -0

Which one of these is true about a bank reconciliation statement?

A
It is a part of memorandum statement

B
It is a part of cash book

C
If is a part of ledger

D
It is a part of bank decumentation

Solution

Bank reconciliation statement is a report which compares the bank balance as per company's accounting records with the balance stated in the bank statement. It is normal for a company's bank balance as per the accounting records to differ from the balance as per bank statement due to timing differences. Certain transactions are recorded by the entity that are updated in the bank's system after a certain time lag. Bank reconciliation statement is a part of cash book. The cash book and pass book/bank statement are prepared separately. The businessman prepares the cash book and the pass book is prepared by the bank.
Question 6
1 / -0

Who prepares the bank reconciliation statement?

A
Business enterprises

B
Statutory Auditor

C
Customer

D
Reserve Bank of India

Solution

It is generally experienced that when a comparison is made between the bank balance as shown in the firm's cash book, the two balances do not tally. Hence, to first ascertain the causes of difference thereof and then reflect them in a statement called Bank Reconciliation Statement to reconcile (tally) the two balances. It is process of matching the balances in a n entity's accounting records for a cash account to the corresponding information on a bank statement. The bank reconciliation statement is prepared by the business enterprises.
Question 7
1 / -0

Which of these types of errors are not detected during bank reconciliation?

A
Cash embezzlement by the Cashier.

B
Cheque deposited but not credited by bank.

C
Casting mistakes in bank column of cash book.

D
Interest or commission charged by the bank but not accounted for in cash book.

Solution

Sometimes the difference between the two balances may be accounted for by an error of the bank or an error in the cash book of the business. This cause difference between the bank balance shown by the cash book and the balance shown by the bank statement. Omission or wrong recording of transactions relating to cheques issued, cheques deposited and wrong totaling, etc. committed by the firm while recording entries in the cash book cause difference between cash book and passbook balance. Cash deposited but not credited by the bank, casting mistakes in bank column of cash book and interest or commission charged by the bank but not accounted for in cash book are the types of errors which are detected, whereas cash embezzlement by the cashier is not detected during bank reconciliation.
Question 8
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 9
1 / -0

Which of the following errors/ omissions are not a part of Bank reconciliation process?

A
Wrong totaling of Bank column of Cash book.

B
Wrong totalling of Cash column of Cash book.

C
Posting wrong amount is Bank Column of Cash book.

D
Omission to carry forward balance in bank column of cash book.

Solution

Bank reconciliation statement is a statement prepared on a particular day to reconcile the bank balance as per cashbook and balance as per passbook showing entries causing difference between the two balances.
Following are the errors for which bank reconciliation statement is prepared:
1. Differences due to timing.
2. Transactions recorded by the bank but not by the business organisation.
3. Errors committed .
Cash column of the cashbook does not affect passbook in anyway, therefore errors in cash column of cashbook are not a part of bank reconciliation process.
Question 10
1 / -0

Bank reconciliation statement is prepared to _________.

A
Reconcile bank balance as per pass book with balance as per cash book

B
reconcile petty cash in hand with cash balance as per cash book

C
reconcile total of debit side of cash book with credit side of bank pass book

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 cause of difference thereof is ascertained. Businesses need to prepare the bank reconciliation statement for the following reasons:
1. To ascertain the balance reported by the company's cashbook is the correct amount.
2. To rectify any errors present in the cashbook. If theses errors are carried forward, it results in an incorrect income statement as well as incorrect balance sheet.
3. More control over the recordings in the cashbook.

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Bank Reconciliation Statement Test - 14

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Bank Reconciliation Statement Test - 14

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Question 1

Pass Book

Cash Book

Advice

Balance Statement

Solution

Question 2

Overdraft

Bank Balance

Loan Borrowed

Nil balance

Solution

Question 3

Sole Proprietor concern

Partnership firm

Corporate bodies

All the three

Solution

Question 4

non-reflection of true balance of cash with bank

non-disclosure of true and fair view of profit and loss a/c

tax avoidance

all the three

Solution

Question 5

It is a part of memorandum statement

It is a part of cash book

If is a part of ledger

It is a part of bank decumentation

Solution

Question 6

Business enterprises

Statutory Auditor

Customer

Reserve Bank of India

Solution

Question 7

Cash embezzlement by the Cashier.

Cheque deposited but not credited by bank.

Casting mistakes in bank column of cash book.

Interest or commission charged by the bank but not accounted for in cash book.

Solution

Question 8

Bank

Creditors

Business Entity

Supplier

Solution

Question 9

Wrong totaling of Bank column of Cash book.

Wrong totalling of Cash column of Cash book.

Posting wrong amount is Bank Column of Cash book.

Omission to carry forward balance in bank column of cash book.

Solution

Question 10

Reconcile bank balance as per pass book with balance as per cash book

reconcile petty cash in hand with cash balance as per cash book

reconcile total of debit side of cash book with credit side of bank pass book

All the three

Solution

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