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Recording and Posting of Cash Transactions Test 2

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Recording and Posting of Cash Transactions Test 2
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  • Question 1
    1 / -0
    When furniture is sold for cash, the entry should be made in ________.
    Solution
    The journal entry for the transaction "furniture is sold for cash" is: 
    Cash A/c Dr.
         To Furniture A/c 
     In this transaction, we have to debit what comes in and credit what goes out i.e. here cash comes in, and furniture goes out. Hence this transaction is recorded in cash book.
  • Question 2
    1 / -0
    The credit balance of bank account indicates________.
    Solution
    The credit balance of bank account indicates amount payable to the bank. Credit balance of bank account means bank overdraft and it comes on balance sheet under liabilities or assets side but with minus sign.
  • Question 3
    1 / -0
    Petty cash system is designed to _____________.
    Solution
    In big business organisations, a large number of repetitive small payments such as, conveyance , cartage, postage, telegrams, courier and other expenses are made. These organisations appoint an assistant to the Head Cashier. The appointed cashier is known as petty cashier. He makes payments of these expenses and maintains a separate cash book to record these transactions. Such a cash book is called Petty Cash Book. The petty cashier works on the imprest system. Petty cash system is designed to cover small expenditures to be paid in cash.
  • Question 4
    1 / -0
    The word "Petty" is derived from ______________.
    Solution
    Petty is a french word which means small. So petty cash book has come into existence which records small amount transactions. Hence, petty is the derivation of the french word.
  • Question 5
    1 / -0
    The 'imprest system' is used in relation to _______________.
    Solution
    Under imprest system of petty cash book, a round sum of money is estimated as necessary for the possible needs of the  business  to meet the petty expenses for the week or fortnight is handed over to the Petty Cashier. At the end of the fixed period or earlier, when petty cashier needs further cash, he submits the petty cash book, along with vouchers.
    The chief cashier examines the cash book with the vouchers. Then, chief cashier gives money/check for the exact amount, which he actually spent during the period. Thus, he starts for the next period with the same sum as held previously. That is, the Petty Cashier will have again the fixed sum in the beginning of the next period. This system is known as Imprest System of Petty Cash Book.
    Hence, the imprest system is used in relation to petty cash book.
  • Question 6
    1 / -0
    Credit balance of bank account in cash book shows ______________.
    Solution
    The debit balance as per the cash book means the balance of deposits held at the bank. Such a balance will be a credit balance as per the passbook. Such a balance exists when the deposits made by the firm are more than its withdrawals.
  • Question 7
    1 / -0
    Which of the following have contra entries?
    Solution
    A Contra entry is an entry that affects both the sides of the same account. Usually, transactions affecting the cash and bank at the same time are recorded as a contra entry. It is represented by 'C' in the ledger folio column of the Cash Book. double column and triple column cash books have Cash and Bank A/c both. Thus, both will have contra entries.
    Thus, the correct option is D.
  • Question 8
    1 / -0
    Cash sales are recorded in __________.
    Solution
    All the cash transactions are recorded in cash book. 
    Sales against cash will increase the cash and decrease the goods.

    Accounting entry will be passed as under:

    Cash A/c                                Dr,
               To Sales/Goods A/c
  • Question 9
    1 / -0
    Petty means ____________.
    Solution
    Petty is a french word which means "small". So petty cash book has come into existence which records small amount transactions.
  • Question 10
    1 / -0
    Double column cash book records ___________________.
    Solution

    The double column cash book (also known as two-column cash book) has two 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 cheques, and works as a bank account. Both the columns are totalled and balanced like a traditional T-account at the end of an appropriate period, which is usually one month.

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