Bank Reconciliation Statement Test - 5

Real accounts are the assets of the firm and will always have a debit balance except sales account and purchase returns accounts which will show credit balance.

Every transaction has two aspects i.e one is debit and its coreesponding credit aspect of the same amount. Dr and Cr is the abbrevaition used for the debit and credit respectively.

Only ledger accounts showing balances are shown in the trial balance. so acocunt showing nil balances are not shown in the trail balance.

Ledger is the most important book in accounting system. it contains all the accounts to which the transactions recorded in the original entry are transferred.It is also called final entry.

Supenses account shows the entries which are not recorded properly or which are wrongly recoreded and need to be corrected and thus its debit side is separately shown on asset side and credit side on liabilities side. suspense account is not balanced.

Contra entry means in which the same ledger is debited as well as credited but in separate columns of cash book. So when we deposit cash in the bank both cash and bank gets affected and thus it is a contra entry. and when cash is withdrwan from bank it is assumed to withdrwan for office use unless otherwise mentioned and thus will have affect on both cash and bank. So both the entries are contra entries.

Sale of goods in cash is recorded in the cash book as separate subsidiary book i.e. cash book is prepared. so it is not recorded in the journal proper.

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.

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

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.

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"

There may be certain transactions which may not show the in bank pass book or cash book bank column such as cheques deposited into the bank but not yet collected, cheques issued but not yet presented for payment, bank charges debited by the bank, etc, whihc will lead to difference in the balance of the two. so a schedule called Bank Reconcialiation statement is prepared in order to match the two.

When goods are distributed as samples it is the promotion and advertisement of the product of the firm, so advertisement which is an expense is debited as it is increasing and our purchase account is reducing as stock reduces from the firm so we credit purchase account.

The business have both cash and bank related transactions and thus they prepare double column cash book in which cash transaction is recorded in cash column and bank transactions are recorded in the bank column.

Trial balance is the abstract or list of the ledger accounts at a closing date showing debit and credit balances for all the accounts and the cash book. It is a statement prepared to test the arthimatical accuracy of the ledger accounts.

A Cheque is the recognised negotiable instrument which instructs the specified banker to pay the amount due to the bearer or the name mentioned in the cheque.

Cash book only records cash transactions that is cash received or paid. It does not record any credit transaction. Thus above statement is false. We have separate subsidiary books to record credit transactions.

When a cheque is received and not further information is given either alongwith the cheque received or on subsequent date about its deposit into bank, it will be assumed that the cheque is depsoited into the bank on the same day when it is received. hence directly bank A/c will be debited to Customer's account.

Nominal accounts are expenses and income of the firm for the current year and thus their balances are not to be carried forward to the next year. that is why they are transferred to trading & profit & loss account

debit balance means the firm has to take the money and credit balance means the firm has to repay the money. therefore debit balance of personal account is debtor and credit balance is creditor.

The cheques which are not deposited in the bank on same day will neither affect bank and cash. So we debit cheques in hand a/c as cheques received are assets and they are increasing so it is debited.

As asset and expenses will always/ mostly have a debit balance and capital, liability and incoem will have credit balances. so Debit balance shows asset / expenses and credit balance shows capital/liability/income.

The Journal entry will be

Cash A/c...................Dr     3800

Discount A/c .............Dr      200

   To Varun's A/c.........                    4000

As more than two accounts are involved therefore it is compound entry.

The question states that if the debit side is more than the credit side of the trial balance, then the excess amount is posted on the credit side as supenses acoount in order to tally trial balance.