Q.1 What is the Cash Book primarily used for?
Recording only credit transactions
Recording only cash and bank transactions
Recording only non-cash transactions
Recording only journal entries
Explanation - The Cash Book records all cash and bank-related receipts and payments, making it both a journal and a ledger.
Correct answer is: Recording only cash and bank transactions
Q.2 Which side of the Cash Book is used to record receipts?
Debit side
Credit side
Both sides
None of these
Explanation - Receipts increase cash or bank balance, so they are recorded on the debit side of the Cash Book.
Correct answer is: Debit side
Q.3 Contra entries in the Cash Book are denoted by:
C
X
CE
BRS
Explanation - Contra entries (cash to bank or bank to cash) are marked with 'C' in the ledger folio column.
Correct answer is: C
Q.4 Which of the following is a feature of a Double Column Cash Book?
It records only cash transactions
It records only bank transactions
It records cash and bank transactions
It records only credit transactions
Explanation - A Double Column Cash Book has two columns: one for cash and one for bank transactions.
Correct answer is: It records cash and bank transactions
Q.5 What does a Bank Reconciliation Statement (BRS) aim to reconcile?
Cash receipts and payments
Cash Book balance with Pass Book balance
Debtors and creditors
Trial balance
Explanation - BRS reconciles the difference between the balance as per Cash Book and as per Pass Book.
Correct answer is: Cash Book balance with Pass Book balance
Q.6 If a cheque issued by the business is not presented in the bank, the Cash Book shows:
Higher balance than Pass Book
Lower balance than Pass Book
Equal balance as Pass Book
No balance difference
Explanation - The Cash Book reduces the bank balance immediately, but the Pass Book shows balance until the cheque is presented.
Correct answer is: Lower balance than Pass Book
Q.7 Which type of Cash Book has three columns?
Simple Cash Book
Double Column Cash Book
Petty Cash Book
Triple Column Cash Book
Explanation - A Triple Column Cash Book records cash, bank, and discount transactions.
Correct answer is: Triple Column Cash Book
Q.8 Petty Cash Book is maintained under which system?
Standing system
Imprest system
Cash basis system
Accrual system
Explanation - Petty Cash Book is generally maintained under the imprest system, where a fixed amount is reimbursed regularly.
Correct answer is: Imprest system
Q.9 Which column in the Triple Column Cash Book records trade discounts?
Cash column
Bank column
Discount column
None of these
Explanation - Trade discounts are not recorded in the Cash Book; only cash, bank, and cash discounts are recorded.
Correct answer is: None of these
Q.10 If a cheque deposited is dishonoured, the entry in the Cash Book is:
Debit Bank column
Credit Bank column
Debit Cash column
No entry
Explanation - Dishonour of cheque reduces bank balance, so the Bank column of the Cash Book is credited.
Correct answer is: Credit Bank column
Q.11 Which of the following is NOT a cause of difference between Cash Book and Pass Book?
Unpresented cheques
Uncollected cheques
Errors in recording
Closing stock valuation
Explanation - Closing stock valuation is unrelated to cash or bank balances, so it does not cause Cash Book and Pass Book differences.
Correct answer is: Closing stock valuation
Q.12 Bank charges are recorded on which side of the Cash Book?
Debit side - Bank column
Credit side - Bank column
Debit side - Cash column
Credit side - Cash column
Explanation - Bank charges reduce the bank balance, hence entered on the credit side of the Bank column.
Correct answer is: Credit side - Bank column
Q.13 If a cheque is deposited but not yet cleared, how does it affect the Cash Book?
It increases bank balance
It decreases bank balance
It does not affect the Cash Book
It increases cash balance
Explanation - When a cheque is deposited, it is immediately recorded in the Cash Book’s bank column as a receipt, even if not cleared.
Correct answer is: It increases bank balance
Q.14 The Cash Book serves the purpose of:
Only a journal
Only a ledger
Both a journal and a ledger
Only a subsidiary book
Explanation - The Cash Book records transactions as a journal and also shows balances as a ledger.
Correct answer is: Both a journal and a ledger
Q.15 Which of the following entries is a contra entry?
Cash deposited into bank
Cheque dishonoured
Bank charges
Interest credited by bank
Explanation - When cash is deposited into bank, both cash and bank accounts are affected, hence it is a contra entry.
Correct answer is: Cash deposited into bank
Q.16 When a cheque issued is not presented for payment, it creates a difference because:
Cash Book reduces balance immediately
Pass Book reduces balance immediately
Both books reduce balance immediately
Neither book records
Explanation - The Cash Book reduces balance when cheque is issued, but the Pass Book reduces only when it is presented to bank.
Correct answer is: Cash Book reduces balance immediately
Q.17 Which of the following is recorded only in the Pass Book but not in the Cash Book unless intimated?
Cash deposited
Bank charges
Cheque issued
Cash withdrawal
Explanation - Bank charges are deducted by the bank and appear in the Pass Book; they must later be recorded in the Cash Book.
Correct answer is: Bank charges
Q.18 A credit balance in the Cash Book (Bank column) means:
Overdraft
Surplus cash
No balance
Error
Explanation - A credit balance in the bank column shows that the business owes money to the bank, i.e., overdraft.
Correct answer is: Overdraft
Q.19 What is the main purpose of preparing a BRS?
To locate errors in Cash Book only
To reconcile Cash Book and Pass Book balances
To prepare final accounts
To check cash balance
Explanation - BRS helps to reconcile the balance as per Cash Book and Pass Book and identify the reasons for differences.
Correct answer is: To reconcile Cash Book and Pass Book balances
Q.20 Which Cash Book is used to record petty expenses?
Single Column Cash Book
Double Column Cash Book
Petty Cash Book
Triple Column Cash Book
Explanation - Petty Cash Book records small and repetitive payments like postage, stationery, etc.
Correct answer is: Petty Cash Book
Q.21 Interest credited by the bank will appear on which side of the Cash Book?
Debit side - Bank column
Credit side - Bank column
Debit side - Cash column
Credit side - Cash column
Explanation - Interest increases bank balance, hence recorded on the debit side of the Bank column.
Correct answer is: Debit side - Bank column
Q.22 Unpresented cheques lead to:
Cash Book showing less balance
Pass Book showing less balance
Both showing equal balance
No difference
Explanation - The Cash Book reduces balance on cheque issue, while Pass Book shows balance until cheque is presented.
Correct answer is: Cash Book showing less balance
Q.23 If the Cash Book shows Rs. 10,000 and there are unpresented cheques of Rs. 3,000, what is the Pass Book balance?
Rs. 13,000
Rs. 7,000
Rs. 10,000
Rs. 3,000
Explanation - Unpresented cheques increase the Pass Book balance compared to the Cash Book, so Rs. 10,000 + Rs. 3,000 = Rs. 13,000.
Correct answer is: Rs. 13,000
Q.24 Cheques deposited but not yet credited cause:
Cash Book balance > Pass Book balance
Cash Book balance < Pass Book balance
No difference
Error in Cash Book
Explanation - Cash Book increases balance immediately, while Pass Book records only after cheque clearance.
Correct answer is: Cash Book balance > Pass Book balance
Q.25 A BRS is usually prepared:
Daily
Weekly
Monthly
Yearly
Explanation - In practice, businesses usually prepare BRS monthly to reconcile balances with the bank statement.
Correct answer is: Monthly