MCQs / Q&A

Which of the following is not a method of charging depreciation?

A. Straight line Method
B. Written down value Method
C. Discounted present value Method
D. Sum of digits Method

Provision is created for____________?

A. Unknown Liabilities
B. Known Liabilities
C. Creation of Secret Reserves
D. All the Three

Which of the following is not a cause of difference in balance as per cash book and balance as per bank pass book___________?

A. Errors in cash book
B. Errors in pass book
C. Cheques deposited and cleared
D. Cheques issued but not presented for payment

Debit balance as per bank pass book mean_____________?

A. Surplus cash
B. Bank Overdraft
C. Terms deposits with bank
D. None of these

Benefits of preparing Bank Reconciliation Statement includes___________?

A. It bring out any errors committed in preparation of Cash book / Bank Pass Book
B. Highlights under delay in clearance of cheques deposited but not credited
C. Help know actual bank balance
D. All the three

Bank reconciliation statement is a part of_________?

A. Cash book
B. Trial balance
C. Auditors report
D. None of these

Bank reconciliation is a statement prepared to reconcile__________?

A. Trial balance
B. Cash book
C. Bank A/c
D. Cash as per cash book with bank balance as per bank pass book

The Bank Reconciliation Statement is prepared?

A. To rectify the mistakes in the Cash Book
B. To arrive at the Bank Balance
C. To arrive at the Cash Balance
D. To bring out the reasons for the difference between the Balance as per Cash Book and the Balance as per Bank Statement

The basic objective of the preparation of the Bank Reconciliation Statement is to locate the reasons for differences between the balance as per Cash book and the balance as per Bank Statement. The ancillary benefits during this process of preparation can be said to be rectification of mistakes in cash book, rectification of mistake in bank statement etc. Hence option D. is the right choice.

A. Cheque issued but not presented
B. Cheque issued but dishonoured
C. Cheque deposited and credited by bank
D. Both A. and B.

Differences in Bank Balance as per Bank Pass Book and Cash Book arise due to many reasons. Few of them are Cheques issued (a credit entry in Cash Book made) but not presented for payment (so no corresponding entry in Pass Book).
Cheques issued (a credit entry in Cash Book made) but dishonoured (so no corresponding entry made in Pass Book).
In case of cheques deposited and credited by bank, entries in both Cash Book and the Bank Pass book are made, hence no difference arises. Hence option D. is the right option. Only in situations A. and B. result in difference

Debit side of Bank Pass book corresponds to___________?

A. Credit side of Cash Book
B. Debit side of Cash Book
C. Debit side of Trial Balance
D. Credit side of Balance Sheet