Bank Reconciliation Statement Test - 2

Overdarft is a short term liability and the client is permitted to overdraw from his account up to agreed limit as per his requirement, and thus overdraft will appear as the credit balance of bank column in the cash book.

Head cashier gives the money in the beginning of the period to the petty cashier and then reimburses the amount actually spent  by the petty cashier. Therefore the above statement is false. Head cashier is not given the money , petty cashier is given the money and that too in the beginning.

All cash transactions whether purchase or sale are recorded in cash book.

Ledger is the permanent storehouse of all the transactions. It contains a classified and permanent record of all the transactions of a business.

In the purchase book only purchase of goods on credit is recorded and thus cash purchases of goods and purchase of long term assets will not be recorded in the purchase book.

The procedure for recording of transaction is first to identify the financial transaction, and then analysis of the transactions which accounts are involved and the the rules of debit and credit will be applied and then the journal entry will be passed.

Only purchase of goods i.e in which trading concern deals is recorded in purchase journal. and asset purchased for cash or credit will be recorded in the journal proper.

Contra means the other side. When both the debit and credit aspects of a transaction are recorded simultaneously in the same book but in dfferent columns, each entry on the debit side and on the credit side is called the contra entry.

If we are going from pass book to cash book, then cheques paid into bank, but dishonored should be added to pass book and if we are going from cash book to pass book we will have to deduct the same transaction in order to reconcile the cash book and pass book.

On the debit side of the ledger we write "To" and on the credit side of the ledger we write "By"