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Recording and Posting of Cash Transactions Test 4

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Recording and Posting of Cash Transactions Test 4
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  • Question 1
    1 / -0
    Person who maintains petty cash book __________.
    Solution
    The petty cash book is a formal summarization of petty cash expenditures, sorted by date. In most cases, the petty cash book is an actual ledger book, rather than a computer record. Thus, the book is part of a manual record-keeping system. 
    A petty cashier is a person who is appointed or who is authorized to make payments of petty cash expenses and record them in the petty cash book. Petty cash expenses include small payments, such as postage, conveyance, etc. that are very small in amount but occur very frequently in business.
  • Question 2
    1 / -0
    Cash book in which the payment side is ruled in suitable columns is ____________.
    Solution
    Petty cash book in which the payment side is ruled in suitable columns is called as Analytical Petty Cash Book. In this type of petty cash book, on the payment (credit) side, a separate column is provided for each class of common expenses. The number of column depends on the nature of business and type of expenses. A small business will need lessee columns and a large business needs more columns. Expenses that cannot be designated to any class of expenses are entered in the column named sundry expenses.
  • Question 3
    1 / -0
    An allowance given by receiver of the cash to the giver of cash at the time of payment is known as _____________ .
    Solution
    Discount is the deduction in the price of the goods sold. It is offered in two ways. Offering deduction of agreed percentage of list price at the time of selling goods is one way of giving discount. Such discount is called 'trade discount'. It is generally offered by manufacturers to whole sellers and by whole sellers to retailers. After selling the goods on credit basis the debtors may be given certain deduction in amount due in case if they pay the amount within the stipulated period or earlier. This deduction is given at the time of payment on the amount payable. Hence, it is called as cash discount. Cash discount acts as an incentive that encourages prompt payment by the debtors.
  • Question 4
    1 / -0
    Entry which is to be recorded on the receipt side as well as payment side of cash book _____________.
    Solution
    When there is a transaction that relates to both cash and bank, this will be written  on one side of bank column and on other side of cash column. Such transactions are known as "Contra entries". In case cash is withdrawn from bank for office use, its is entered on the credit side of bank column and also in the debit side of cash column of the cash book. In case cash is deposited in the bank, the amount is recorded on the debit side of bank column and on the credit side of cash column of the cash book. The letter "C" is written in the LF column on both sides against these entries. These entries are not to be posted into ledger.
  • Question 5
    1 / -0
    Direct deposit made by customer into your bank is recorded on the ______ side of the cash book.
    Solution
    Cash book is a book in which all transaction relating to cash receipts and cash payments are recorded. It starts with the 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 in all organisations, big or small, profit or not-for-profit. It serves the purpose of both journal as well as the ledger account. It is also called as the book of original entry. The left side of the cash book shows the receipts of the cash whereas the right side of the cash book shows all the payments made in cash. The accounts appearing on the debit side for the cash book are credited in the respective ledger accounts because cash has been received in respect of them. Direct deposit made by customer into your bank is recorded on the receipts side of the cash book.
  • Question 6
    1 / -0
    Additional cash introduced in business is recorded in ______.
    Solution
    Cash book is a book in which all transactions relating to cash receipts and cash payments are recorded. It starts with the cash or bank balances at the beginning of the period. 
    When a cash book is maintained, transactions of cash are not recorded in the journal, and no separate account for cash or bank is required in the ledger. Any additional cash introduced in the business  is also recorded in the cash book.
  • Question 7
    1 / -0
    An entry recorded on both sides of cash Book is known as _______ entry.
    Solution
    An entry which is made on both sides of a cash book is called Contra entry. 
    In the dual entry accounting system, a Contra Entry is an entry which is recorded to reverse or offset an entry on the other side of an account. .
  • Question 8
    1 / -0
    When cheque is ___________ into bank, cash book is debited.
    Solution
    When cheque is deposited in Bank the entry for the same is as follows :
    Cash/Bank A/c.  ........................... Dr.
    To Sundry receivables A/c.
    So, when a cheque is deposited into Bank the bank balance in the cash book would increase and as the cash book shows a debit balance, the cash book is to be debited which is evidently clear from the above journal entry
  • Question 9
    1 / -0
    Closing balance of cash book is _____________ balance.
    Solution
    Total of the debit side of the cash book or cash A/c always exceeds its credit side because payments of a business cannot exceed the receipts amount. So, the cash book shows debit balance. When payments are exactly equal to the receipt of the business, it will show zero balance, but it can never show the credit balance. Thus, the cash book will always show debit balance or zero balance.
  • Question 10
    1 / -0
    Cash Account always shows _______ balance.
    Solution
    Cash book is a book in which all transactions relating to cash receipts and cash payments are recorded. It starts with the 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 the organisation, big or small, profit or not-for-profit. On the left side, all cash transactions relating to cash receipts (debits) and on the right side all transactions relating to cash payments (credits) are entered date-wise. 

    When a cash book is maintained, a separate cash book in the ledger is not opened. The cash book is balanced in the same way as an account in the ledger. 
    Hence,Cash account will always show a debit balance because cash payments can never exceed cash receipts and cash in hand at the beginning of the period.
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