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CBSE Questions for Class 10 Elements Of Book Keeping And Accountancy Bank Reconciliation Statement Quiz 5 - MCQExams.com
CBSE
Class 10 Elements Of Book Keeping And Accountancy
Bank Reconciliation Statement
Quiz 5
Bank charges amounting to Rs.$$5000$$ was not entered in the cash book. Identify the correct adjustment in cash book .
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Bank charges will be debited in cash book.
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Bank charges will be added to cash book balance.
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Bank charges will be credited in cash book.
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Bank charges need no adjustment in cash book.
Explanation
Bank charges is an expense for the business. It is credited in the cash book when paid as it reduces the balance as per cash book. Thus, bank charges of Rs. 5000 which have not been entered in the cash book will be credited in the cash book.
When drawing up a bank reconciliation statement, if you start with a debit balance as per the pass book, the cheques issued but not presented for payments should be _________.
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subtracted
0%
not required to be adjusted
0%
added
0%
none of these
Explanation
Cheques issued but not presented for payment are entered in the cash book at the moment the cheques are drawn but would not be reflected in the pass book and so the cash book balance would be higher.
Therefore, when drawing up a bank reconciliation statement, if you start with a debit balance as per pass book, the cheques issued but not presented for payments should be added to reach the cash book balance
________ is a statement which is prepared as on a particular date to reconcile the bank balance as per cash book with balance as per pass book by showing all the causes of difference between the two.
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A bank statement
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A bank reconciliation statement
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Income Statement
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Position statement
Explanation
Whenever money is deposited in bank or withdrawn from bank it is recorded in two places.
The pass book maintained by the bank
The cash book (bank column ) maintained by the account holder.
These two books are opposites of each other which means if one shows credit balance then the other would reflect a debit balance of the exact same amount. But due to reasons like timing differences the balances of both these books on a particular date do not match.
Now, it is not practical and feasible for the bank to reconcile the account balances of each and every account holder so, the account holder prepares a bank reconciliation statement for his account maintained in the bank.
A bank reconciliation statement is a statement prepared to reconcile________.
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cash balance as per cash book and bank balance as per pass book
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bank balance as per cash book and bank balance as per pass book
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both (A) & (B)
0%
none of the above
Explanation
Whenever money is deposited in bank or withdrawn from bank it is recorded in two places.
The pass book maintained by the bank
The cash book (bank column ) maintained by the account holder.
These two books are opposites of each other which means if one shows credit balance then the other would reflect a debit balance of the exact same amount. But due to reasons like timing differences the balances of both these books do not match.
Now, it is not practical and feasible for the bank to reconcile the account balances of each and every account holder so, the account holder prepares a bank reconciliation statement for his account maintained in the bank.
When balance as per cash book is the starting point, bank charges not recorded in cash book are ________.
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0%
Subtracted
0%
Not required to be adjusted
0%
Added
0%
None of the above
Explanation
Bank charges are those service charges which charged by the bank to the account holder for providing the banking services. The amount of such charges is directly debited to the bank account as per the calculation policy of the bank. Since the amount cannot be ascertained by the account holder, it is not recorded in the records maintained by them. Hence, in the reconciliation statement such amount is subtracted to get the closing balance as per bank pass book.
When balance as per cash book is the starting point, un-collected cheques are ___________.
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subtracted
0%
not required to be adjusted
0%
added
0%
none of the above
Explanation
Uncollected cheques are those which are yet to be deposited by the account holder in the bank , due to which the cash book balance would be higher than the pass book balance.
So, while preparing the reconciliation statement if cash book is the starting point, uncollected cheques are to be subtracted.
Overdraft as per pass book of P&Co. was Rs.$$60,000$$.
-The credit side of bank column of cash book was under cast by Rs.$$200$$.
-Interest on bank loan Rs.$$4,000$$ and bank charges of Rs.$$1,150$$ were not recorded in cash book.
Overdraft balance as per cash book should be _________.
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0%
Rs.$$65,350$$
0%
Rs.$$54,650$$
0%
Rs.$$57,350$$
0%
Rs.$$56,950$$
Explanation
The reconciliation is as follows :
Particulars
Amount in Rs.
Overdraft as per pass book
$$60000$$
Less
Under casting of the credit side of bank column of the cash book
$$200$$
Less
Interest on bank loan not recorded in cash book
$$4000$$
Less
Bank charges not recorded in cash book
$$1150$$
Overdraft as per cash book
$$54650$$
When balance as per cash book is the starting point, cheques deposited but dishonoured are ____________ .
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0%
Subtracted
0%
Not required to be adjusted
0%
Added
0%
None of above
Explanation
When cheque is deposited in the bank, the account holder would debit his bank column of the cash book to increase the bank balance, but when the same cheque gets dishonoured his cash book would show higher balance than his pass book.
So, while reconciling the bank balances if balance as per cash book is the starting point, cheques deposited but dishonoured are subtracted.
On $$31$$st December balance as per pass book(Cr.) Rs.$$50,900$$. A comaparison of pass book and cash book revealed the following.
-Cheque deposited for Rs.$$1,000$$ was not credited in pass book.
-Out of cheques of Rs.$$10,000$$ issued only cheques amounting to Rs.$$7,500$$ were presented for payments.
Balance as per cash book will be ___________.
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Rs.$$55,800$$
0%
Rs.$$47,400$$
0%
Rs.$$49,400$$
0%
Rs.$$52,400$$
Explanation
The reconciliation is as follows :
Particulars
Amount in Rs.
Balance as per pass book as on 31 st December (Cr.)
$$50900$$
Add
Cheque deposited but not credited
$$1000$$
Less
Cheque issued but not presented for payment
$$2500$$
Balance as per cash book as on 31 st December (Dr.)
$$49400$$
Bank balance as per cash book (Dr.)Rs.$$24,450$$. A comparison of pass book and cash book revealed the following
-Bank charges Rs.$$200$$ was not entered in cash books.
-Cheques amounting to Rs.$$250$$ has been dishonored but nor recorded in cash book.
Balance as per pass book will be _________________.
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Rs.$$25,000$$
0%
Rs.$$25,900$$
0%
Rs.$$24,000$$
0%
Rs.$$25,400$$
Explanation
Particulars
+
-
Balance as per cash book (Dr.)
24,450
Bank charges not entered in cash book
200
Cheque Dishonored but not recorded in cash book
250
Balance as per Pass book (Cr.)/ Favourable balance
24,000
When balance as per cash book is the starting point, cheques issued but not presented for payments are ____________.
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0%
subtracted
0%
not required to be adjusted
0%
added
0%
none of the above
Explanation
In case of cheques issued but not presented for payment, the entry for the same would be entered in the cash book as soon as the cheques are issued by the account holder as a result the cash book balance would be less than the pass book balance.
So, while preparing reconciliation statement if balance as per cash book is the starting point , cheques issued but not presented for payments are added .
The cash book of N Ltd. showed debit balance of Rs.$$6,000$$. A comparison of pass book and cash book revealed the following
-Cheques amounting of Rs.$$250$$ has been dishonoured but not recorded in cash book.
-Total of credit side bank column in cash book was under cast by Rs.$$475$$
Balance as per pass book will be ________.
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0%
Rs.$$6,225$$
0%
Rs.$$5,775$$
0%
Rs.$$6,725$$
0%
Rs.$$5,275$$
Explanation
Particulars
+
-
Balance as per cash book (Dr.)
6,000
Cheque dishonoured but not entered in cash book
250
Amount by which cash book is undercast
475
Balance as per pass book
5,275
In balance sheet bank balance as per ______ appears.
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0%
pass book
0%
cash book
0%
adjusted cash book
0%
none of above
Explanation
An adjusted cash book refers to the cash book which has been adjusted for the discrepancies and time differences found out while reconciling the cash book and the pass book. So, when the bank balance is reported in the balance sheet it is the reconciled one taken from the adjusted cash book.
The pass book of N Ltd. showed credit balance of Rs.$$9,000$$. A comparison of pass book and cash book revealed the following:
-Cheques amounting to Rs.$$375$$ has been dishonoured but not recorded in cash book.
-Total of credit column of cash was under cast by Rs.$$712.50$$.
Balance as per cash book will be ________.
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Rs.$$9,337.50$$
0%
Rs.$$8,662.50$$
0%
Rs.$$10,087.50$$
0%
Rs.$$7,912.50$$
Explanation
Particulars
+
-
Balance as per pass book (Cr.)
9,000
Cheques dishonoured but not entered in cash book
375
Amount by which credit side of cash book is undercast
712.50
Balance as per cash book
10,087.50
Some of the transaction that is dependent on bank statement are ____________.
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collection charges
0%
dividends received
0%
pre-scheduled payments
0%
all of the above
Explanation
Collection charges are directly charged by the bank for providing specified services and this amount is charged completely on the discretion of the bank. This amount can be recorded in the books of accounts only when we have the bank statement and not before that.
In case of date of declaration of dividend and the date of actual receipt of it there would a difference so we need the bank statement for the actual date of receipt.
Pre-scheduled payments are the expense bills to be paid or subscription to be paid on timely intervals. They are scheduled as per the account holders and are therefore executed by the bank automatically. To record such transactions bank statement/pass book is necessary.
The purpose of preparing a bank reconciliation statement is to ____________.
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Ascertain that the difference between the cash book balance and the bank statement balance has been accounted for
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Correct errors in the cash book or errors in the bank statement
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Amend the balance of the bank statement of the firm
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Amend the balance in the cash book of the firm
Explanation
The purpose of preparing a bank reconciliation statement is to amend the balance of the bank statement of the firm.Such amendment is required because of various errors of omissions, casting errors and timing differences arising during accounting the bank transactions.
bank reconciliation statement is the only way to solve these errors and reflect a proper bank balance.
It is not true for bank reconciliation statement __________.
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that the bank balance as per cash book and pass book are same
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prepared on a particular date
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a single transaction is recorded both in bank pass book as well as bank cash book.
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the transaction in the cash book one recorded as per client new point.
Explanation
Bank reconciliation statement is prepared to Reconcile the differences between the balances as per cash book (bank column) and passbook (bank statement) by identifying the causes of differences between the two for a particular period. If the two balances match, then there is no need for a bank reconciliation statement. So, it is true that for a bank reconciliation statement, a single transaction is recorded both in bank passbook and bank cash book or the transactions recorded in cash book are from the point of view of the client/ customer and it is prepared on a particular date. But, it is not true that the balance as per bank column in the cash book and passbook are same for preparing bank reconciliation statement because if the two balances are same, then bank reconciliation statement is not required.
Bank reconciliation statement is not prepared to arrive at the bank balance.
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True
0%
False
Explanation
True. Bank reconciliation statement is prepared to reconcile the balances as per cash book (bank column) and passbook (bank statement) by identifying the causes of differences between the two for a particular period. The bank reconciliation statement is prepared with the objective of reconciling the balances and not arriving at the bank balance.
Which of the following will require adjustment of the cash book balance?
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Cheque deposited but not cleared.
0%
Cheque issued but not presented for payments.
0%
Under casting of debit side of bank column of cash book.
0%
All of the above.
Explanation
Cheque deposited but not cleared and cheque issued but not presented for payment, both are timing differences and would get cleared and adjusted automatically. Whereas, under casting of debit side of bank column of cash book is an clerical error and it would have to be adjusted so as to reflect the proper bank balance as per cash book.
Bank Reconciliation Statement is prepared to arrive at the Bank Balance.
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True
0%
False
Explanation
False. Bank reconciliation statement is prepared to Reconcile the balances as per cash book (bank column) and pass book (bank statement) by identifying the causes of difference between the two for a particular period. it is prepared with the objective of reconciliation and not to arrive at the bank balance.
Bank reconciliation sometimes points to the need for adjusting entries. Invariably how should it be done?
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The reconciliation of the ending balance per the bank statement to the adjusted cash balance.
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The reconciliation of the cash balance per the company records to the adjusted cash balance.
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Both a and b
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None of the above.
Explanation
Bank statement provided by the bank shows the balance as on date.Hence, bank column of cash book might not reflect all the entries as shown in bank pass book since some entries only reflect in bank pass book.Adjustments are made in business's cash book to arrive at the final balance available with the business.
Favourable balance as per pass book means which of the following?
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Credit balance in pass book.
0%
Debit balance in pass book.
0%
Bank overdraft.
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None of the above.
Explanation
Amount deposited into bank is recorded in the bank column of cash book on the debit side, while withdrawals are recorded on the credit side.
Bank also maintains an account of the account holder in its books of accounts. Deposits by the account holder are recorded on the credit side of the account holder's account and withdrawals are recorded on the debit side of the account holder's account.
When the deposits are more than the withdrawals, it will show a favourable balance as the credit is more than debit. Therefore, a credit balance is known as a favorable balance of the pass book.
Which of the following will not require adjustment of the cash book balance?
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Error in pass book.
0%
Cheque issued but not presented for payments.
0%
Cheque deposited but not cleared.
0%
All of the above.
Explanation
An error in pass book would require adjustment of the pass book balance and not the cash book balance.
Cheque issued but not presented for payments and cheque deposited but not cleared both these situations arise due to timing differences and would get cleared and adjusted automatically and so will not require any adjustment of the cash book balance.
The proper treatment of outstanding cheques on a bank reconciliation when balance as per cash book is the starting point is __________ .
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0%
Addition
0%
Deduction
0%
Ignore
0%
None of the above
Explanation
In case of outstanding cheques the entry would have been entered in the cash book and so the cash book balance would be lower than the pass book balance.
Therefore, while preparing a bank reconciliation statement when the cash book balance is the starting point, outstanding cheques should be added.
Bank charges amounting to Rs 5000 was not entered in the cash book. Identify the correct adjustment in accounts:
Report Question
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Bank charges will be debited in cash book.
0%
Bank charges will be added to cash book balance
0%
Bank charges will be credited in cash book
0%
Bank charges need no adjustment in cash book
Explanation
Bank charges are collected by the bank for providing various services from its customers.
It is an expense for the company which is the customer of the bank. When the company will pay such charges to the bank, its bank balance will reduce. Thus, the bank charges will be credited in the cash book.
_______ are cheques that are issued by the business but not yet presented to bank.
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0%
Uncollected cheques
0%
Uncredited cheques
0%
Outstanding cheques
0%
Bounced cheques
Explanation
Outstanding Cheques are cheques that are issued by the business but not yet presented to bank.
These are those cheques against which the payment is yet to be made by the bank on the behalf of the business. They are also known as unpresented cheques.
Unrepresented cheques are also referred as __________.
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0%
uncollected cheques
0%
uncredited cheques
0%
outstanding cheques
0%
bounced cheques
Explanation
Unpresented cheques are cheques which are written and sent to its suppliers or creditors by the company.
The company accountant reduces the balance in the cash book, i.e.credit the cash book when these cheques are written and sent. However, the bank will record such reduction in the pass book only when the payment has been made against them i. e. they are cleared from the banks.
Thus, they are also referred as outstanding cheques as the payment which is to be made against them is still outstanding till the time they are not cleared from the banks.
Bank reconciliation statement points out __________.
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credibility of the balance shown in pass book.
0%
savings account
0%
fixed deposit account
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recurring deposit account.
Explanation
A bank reconciliation statement is prepared to identify the causes of differences between the balance as per cash book (bank column) and the balance as per pass book (bank statement). It is prepared by taking one balance as the starting point, accommodating all the causes of differences and finally arriving at the other balance. Thus, if a person is able to arrive at the other balance correctly, it can be said that such bank reconciliation statement points out the credibility of the balance shown in the pass book.
In case of an enterprise having an overdraft facility, the bank reconciliation statement treats all the cheques deposited but not cleared in the cash book to be ________.
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0%
Added
0%
Deducted
0%
To be revealed only in pass book
0%
To be revealed only in cash book
Explanation
Cheques deposited but not cleared are those cheques which have been received by the customer and deposited into the bank for collection.
This will result in debiting the cash book, thereby increasing the balance of the cash book (bank column). However, the bank will give the same effect, i.e. increase the balance in the bank account only when the cheque is cleared. This is not affected by the fact that the enterprise has an overdraft facility at the bank or not.
Thus, in case of an enterprise having an overdraft facility the bank reconciliation statement treats all the cheques deposited but not cleared as added.
An enterprise take cash book balance as the base for preparation of bank reconciliation statement. Some of the bank charges have been put. These charges will be ___________.
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0%
added in cash book
0%
deducted in cash book
0%
nothing is to be done for this entry
0%
none of the above
Explanation
Bank charges are charged by the bank for providing its various services.
It is generally first recorded in the pass book (bank statement) and then taken into account in the cash book by the accountant. While preparing the bank reconciliation statement taking cash book as the base, such bank charges will be deducted in the cash book because it has not been recorded in the cash book yet. To reach to the balance as per pass book (bank statement) correctly, we will have to take into consideration all such causes of differences which have not been taken into account in the cash book.
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