Accountancy MCQs
Topic Notes: Accountancy
General Description
Plato
- Biography: Ancient Greek philosopher (427–347 BCE), student of Socrates and teacher of Aristotle, founder of the Academy in Athens.
- Important Ideas:
- Theory of Forms
- Philosopher-King
- Ideal State
31
What is the nature of a Bank Reconciliation Statement?
Answer:
A memorandum statement
A Bank Reconciliation Statement is a memorandum statement prepared to reconcile the differences between the bank balance shown in the cash book and the balance shown in the bank passbook. It is not a formal ledger account or a part of the double-entry system.
32
To which accounting record is the Bank Reconciliation Statement typically considered an auxiliary or supplementary component?
Answer:
Cash book
A Bank Reconciliation Statement is prepared to reconcile the balance shown in the bank column of the Cash Book with the balance shown in the Bank Pass Book. It is essentially a memorandum statement used to explain differences between these two records, often associated with the Cash Book's maintenance.
33
What are the primary benefits of preparing a Bank Reconciliation Statement?
Answer:
All the three
A Bank Reconciliation Statement serves multiple purposes: it identifies errors in the cash book or passbook, tracks the status of uncleared cheques, and provides an accurate reflection of the actual bank balance available to the business at a specific point in time.
34
What is the document that reconciles the differences between the cash book balance and the bank statement balance called?
Answer:
Bank Reconciliation Statement
A Bank Reconciliation Statement is prepared to identify and explain the discrepancies between the bank balance shown in the business's cash book and the balance reported by the bank in the monthly bank statement.
35
What is the name of the document prepared to reconcile the differences between the cash book balance and the bank statement balance?
Answer:
Bank Reconciliation Statement
A Bank Reconciliation Statement is a report that explains the differences between the bank balance shown in an organization's bank column of the cash book and the balance shown on the bank statement. These differences often arise due to timing issues, such as unpresented cheques or outstanding deposits.
36
In the context of a bank reconciliation statement, how is a 'deposit in transit' typically treated?
Answer:
Added to bank balance
A deposit in transit refers to funds that the business has recorded in its cash book but have not yet been processed or credited by the bank. To reconcile the bank statement balance with the cash book balance, these deposits must be added to the bank statement balance to reflect the true financial position of the account.
37
Can a bank reconciliation statement be initiated using only the cash book balance?
Answer:
False
While it is common to start with the cash book balance, a bank reconciliation can also be started with the bank statement balance. Therefore, the statement that it can be started with a cash book balance 'only' is false, as both starting points are valid methods.
38
Which of the following items are excluded when preparing an amended cash book?
Answer:
All of the above
An amended cash book is updated only for transactions that have already occurred in the bank statement but were not previously recorded in the firm's books. Items like unpresented cheques, uncredited deposits, and bank errors are timing differences or bank-side adjustments that are reconciled in the Bank Reconciliation Statement, not by amending the cash book itself.
39
Given an adjusted cash book balance of $1,000, unpresented checks of $2,000, uncredited checks of $500, and deposits in transit of $500, what is the balance as per the bank statement?
Answer:
$2000
To find the bank statement balance, start with the adjusted cash book balance ($1,000). Add unpresented checks ($2,000) because they reduce the bank balance when cleared, and subtract uncredited checks ($500). Deposits in transit are essentially uncredited checks. Calculation: $1,000 + $2,000 - $500 - $500 = $2,000. This reconciles the cash book to the bank statement.
40
Which financial record is primarily reconciled using a Bank Reconciliation Statement?
Answer:
Cash book
A bank reconciliation statement is a financial document used to clarify discrepancies between a company's cash book and its bank statement. It helps identify and reconcile outstanding deposits, checks, and bank charges, ensuring that the internal records match the bank's official statement.