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Recording and Posting of Cash Transactions Test 19

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Recording and Posting of Cash Transactions Test 19
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  • Question 1
    1 / -0
    Excess of bank withdrawal over bank deposits __________.
    Solution
    The opening cash and bank balances are recorded on the debit side of the cash book. Sometimes a businessman withdraws excess amount from the bank (from his bank account) and the closing bank balance of a month is a credit balance. This balance amount is called 'Bank Overdraft'. It is written on the credit side of the bank column of the cash book as opening balance.
  • Question 2
    1 / -0
    Purchase of machinery for business on cash is recorded in ____________.
    Solution
    Cash book is a book in which all cash receipts and cash payments are recorded. It is also one of the books of original entry. It starts with the cash or bank balance at the beginning of the period. In case of new business, there is no cash balance to start with. It is prepared by all organisations. When a cash book is maintained, cash transactions are not recorded in the journal, and no cash or bank account is required to be maintained in the ledger as cash book serves the purpose of cash account.
    Hence, purchase of machinery for business on cash is recorded in cash book.
  • Question 3
    1 / -0
    Double column cash book records transaction relating to __________ and ___________.
    Solution
    The double column cash book (also known as two column cash book) has two money columns on both debit and credit sides-one to record cash transactions and one to record bank transactions. The cash column is used to record all cash transactions and works  as a cash account whereas bank column is used to record all receipts and payments made by checks and works as a bank account. Both the columns are totaled and balanced like a traditional T-account at the end of an appropriate period which is usually one month.
  • Question 4
    1 / -0
    Day-to-day cash transactions of club are recorded in __________.
    Solution
    Cash book is a book in which all transactions relating to cash receipts and cash payments are recorded. It starts with cash or bank balances at the beginning of the period. Generally, it is made on monthly basis. This is a very popular book and is maintained by all organisations, big or small, profit or not-for-profit. It serves the purpose of both journal as well as  the ledger account. Day-to-day cash transactions of a club are recorded in the cash book.
  • Question 5
    1 / -0
    Which of the following Cash Book is treated as a 'Cash Account' ?
    Solution
    The single column cash book (also known as simple cash book) is a cash book that is used to record only cash transactions of a business. It is very identical to a traditional cash account in which all cash receipts are recorded on left hand (debit) side and all cash payments are recorded on right hand (credit) side in a chronological order. 
    The single column cash book has only one money column on both debit and credit sides titled as "amount" which is periodically totaled and balanced like a T-account. As stated earlier, a single column cash book records only cash related transactions. The entries relating to checks issued, checks received, purchase discount, and sales discount are not recorded in single column cash book.
  • Question 6
    1 / -0
    Book in which small payments are recorded is ____________.
    Solution
    The petty cash book is defined as a relatively small amount of cash kept at hand for making quick payments for miscellaneous small expenses in the business concern. A cash book that is created for the small payments of an organization i.e. taxi fare, car fare, bus fare, postage and stamps etc. has a separate fund to meet the day to day petty expenses in the office is called as petty cash book. It is established in the responsibility of petty cashier who maintains a separate cash book to record, such small payments only. It's a cash book to enter daily expenses like the cost of stationery, postage and so on. The petty cash book will be maintained by a separate cashier known as a petty cashier in the accounting field. 
  • Question 7
    1 / -0
    Cash cannot be misappropriated by ____________.
    Solution
    Fictitious entries done in the receipt side of cash book will increase the cash balance of the organization, hence it is not possible to misappropriate the cash by doing the fictitious entries on the receipt side of cash book.
  • Question 8
    1 / -0
    ____________recorded in cash book.
    Solution
    Option A: 5000 received from Rahul
    Due to this transaction, there is an increase in cash, therefore it will be recorded in the Cash Book.

    Option B: 6500 paid to Gopal
    There is a decrease in cash by 6500 therefore it will be recorded in the Cash Book.

    Option C: Loan taken from bank Rs. 51000
    Therefore, there is an increase in cash due to this transaction 

    All the transaction involve inflow or outflow of cash therefore, all will be recorded in the cash book.
  • Question 9
    1 / -0
    _________ is the book which is used for the purpose of recording the payment of petty cash expenses.
    Solution
    In every organisation, a large number of small payments such as conveyance, cartage, postage, telegrams and other expenses are made. These are generally repetitive in nature. 
    If all these payments are handled by the cashier and are recorded in the main cash book, the procedure is found to be very cumbersome. The cashier may be overburdened and the cash book may be become very bulky. 
    To avoid this, large organisations normally appoint one more cashier and maintain a separate cash book to record these transactions. Such a cash book maintained by petty cashier is called petty cash book. It is used for the purpose of recording the payment of petty cash expenses.
  • Question 10
    1 / -0
    Select the most appropriate alternative from those given below and rewrite the sentence.
    Transactions related to Cash and Bank A/c are entered in _________ voucher.
    Solution
    A typical cash book is having two column i.e. cash and bank column. Its called two column cash book. Transactions related to cash and bank are recorded through these columns. 
    In case of cash withdrawal and cash deposit, the entry is passed through both the columns. 
    For example, cash withdrawal from bank Rs.5000/- . In such case, cash of Rs.5000 is recorded in the receipt side of cash book and same amount is recorded in bank column of payment side. Its called "contra" transaction. 
    To denote specifically "C" is put against each of the contra transaction.
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