Recording and Posting of Cash Transactions Test 20

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Recording and Posting of Cash Transactions Test 20

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Question 1
1 / -0

While adjusting the cash balance which one of the following is not taken into account?

A
Payment directly received by bank as per instructions

B
Payment directly made by the bank as per standing instructions

C
Mistake in cash book

D
Mistake in pass book

Solution

When there is a difference between bank column of cash book and pass book, there may be confusion that which balance should be taken to "Balance Sheet" as "Bank Balance" while preparing financial statements.
Since there is a difference between bank column of cash book and pass book taking either of the two balances will not reflect a true picture of the "Bank Balance".

Therefore, at the end of the financial year, cash book must be adjusted for all the omissions/errors etc. It is known as "Adjusted Cash Book". Such adjusted cash book will be taken to balance sheet as "Bank Balance". No errors of the pass book will be taken into account while adjusting the cash balance.
Question 2
1 / -0

Which of these items are taken into consideration for preparing adjusted cash book?

A
Cheque issued by not paid

B
Cheque deposited but not cleared

C
Wrong totalling of pass book

D
Mistake in Cash book

Solution

When there is a difference between bank column of cash book and pass book, there is confusion that which balance should be taken to "Balance Sheet" as "Bank Balance" while preparing financial statements.

Since there is a difference between bank column of cash book and pass book, taking either of the two balances will not relevant a true picture of the "Bank Balance".

Therefore, at the end of the financial year, cash book must be adjusted for all the errors/omissions etc. It is called as "Adjusted Cash Book". All errors made in the cash book are to be taken into consideration for preparing adjusted cash book.
Question 3
1 / -0

Cash purchase of trading goods is initially recorded in _______.

A
purchase day book

B
cash book

C
directly in Purchase A/c

D
any of the above three

Solution

All cash transactions are recorded in cash book which is a subsidiary book. Goods purchased on cash basis must be recorded in cash book.
Question 4
1 / -0

A company was entered in hire purchase agreement and had to pay Rs.1000 per month. Three payment we accounted but no entry was found in cash book. Identify the correct adjustment in cash book.

A
Rs. 1000 will be added to cash book balance

B
Rs. 2000 will be deducted from cash book balance

C
Rs. 3000 will be added to cash book balance

D
Rs. 3000 will be subtracted from cash book balance
Question 5
1 / -0

Which of the following is/are advantages of the imprest system?

A
It saves the time of the chief cashier.

B
It reduces the chances of misuse of cash by the petty cashier.

C
It enables a great saving to be effected in the posting of small items to the ledger accounts.

D
All of the above

Solution

Under Imprest system, a fixed amount of money known as float is given to the petty cashier to meet petty expenditures for an agreed period which usually consists of a week or month.
At the end of agreed period, the petty cashier submits the details of all expenditures incurred by him to the chief cashier.

The imprest system of petty cash is used by most of the companies because of the following advantages:

1. The imprest system reduces the chances of misuse of cash because the float can be immediately reduced is it is found to be more adequate for the agreed period.
2. Under this system, the chief cashier periodically checks the record of petty cash. If an error is committed by petty cashier, it can be detected and rectified soon.
3. It saves the time of the firm's chief cashier who is usually a busy person with heavy responsibilities of handling large receipts and payments by cash and checks.
4. There are little to no chance of misappropriation of cash by the person in charge because the imprest sum is usually very small.
Question 6
1 / -0

Which of the following books is used to record purchase of the machinery by cash ?

A
Cash book

B
Purchases book

C
Journal proper

D
Purchases returns book

Solution

A cash book is a statement which records all the cash receipts and cash payments of the business transactions.
In case of machinery purchased by cash,the two accounts which get affected would be the machinery account and the cash paid as per the following entry:

Machinery Account Dr.
To Cash Account
Question 7
1 / -0

________will have a normal credit balance?

A
Purchases

B
Sales Returns and Allowances

C
Freight-in

D
Discount received

Solution

Discount are having both types, discount allowed and discount received.

Discount allowed is debited to the expenses account while discount received is considered as income.

An accounting entry is passed as :

Creditors A/c Dr.
To Discount received A/c.

Discount received is an income and will show a credit balance.
Question 8
1 / -0

Which of the following type of discount is not considered in accounts?

A
Trade discount

B
Special discount

C
Cash discount

D
None of the above

Solution

Discount are of two kinds:
Trade discount and cash discount.

Trade discount is allowed to promote the sales and given as a general practice. Trade discount is allowed on the list price or catalogue price.
Trade discount is not recorded in books of account.
Net price i.e. List price minus trade discount is considered as sale value.
Question 9
1 / -0

Bank A/c will have _____.

A
Debit Balance

B
Credit Balance

C
Nil

D
Bebit or Credit balance

Solution

Bank account may have debit or credit balance depending on the nature of transaction. If money is borrowed from a bank, that will show a credit balance and appear as liability in the balance sheet. If firms own money in lying in the bank, it will have a debit balance in firms book and appears as current asset in the balance sheet.
Question 10
1 / -0

The advantages of imprest system of petty cash include:
1. The main (or head) cashier is relieved of maintaining record of petty payments
2. Small payments are not stuffed in the main cash book.
3. Complete and reliable check is maintained on small items of expenses
4. It is automatically balanced.

A
$$1, 2$$ and $$4$$

B
$$1, 2$$ and $$3$$

C
$$2, 3$$ and $$4$$

D
$$2$$ and $$4$$

Solution

The advantages of imprest system of petty cash include:
1. The main (or head) cashier is relieved of maintaining record of petty payments
2. Small payments are not stuffed in the main cash book.
3. Complete and reliable check is maintained on small items of expenses

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Re-Attempt Weekly Quiz Competition

Recording and Posting of Cash Transactions Test 20

Result

Recording and Posting of Cash Transactions Test 20

Score

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Rank

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SHARING IS CARING

Question 1

Payment directly received by bank as per instructions

Payment directly made by the bank as per standing instructions

Mistake in cash book

Mistake in pass book

Solution

Question 2

Cheque issued by not paid

Cheque deposited but not cleared

Wrong totalling of pass book

Mistake in Cash book

Solution

Question 3

purchase day book

cash book

directly in Purchase A/c

any of the above three

Solution

Question 4

Rs. 1000 will be added to cash book balance

Rs. 2000 will be deducted from cash book balance

Rs. 3000 will be added to cash book balance

Rs. 3000 will be subtracted from cash book balance

Question 5

It saves the time of the chief cashier.

It reduces the chances of misuse of cash by the petty cashier.

It enables a great saving to be effected in the posting of small items to the ledger accounts.

All of the above

Solution

Question 6

Cash book

Purchases book

Journal proper

Purchases returns book

Solution

Question 7

Purchases

Sales Returns and Allowances

Freight-in

Discount received

Solution

Question 8

Trade discount

Special discount

Cash discount

None of the above

Solution

Question 9

Debit Balance

Credit Balance

Nil

Bebit or Credit balance

Solution

Question 10

$$1, 2$$ and $$4$$

$$1, 2$$ and $$3$$

$$2, 3$$ and $$4$$

$$2$$ and $$4$$

Solution

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