Multiple Choice Questions
1. ……… is a statement which is prepared
mainly to reconcile the difference
between the bank balance as shown by
the cash book and pass book.
(a) Bank Reconciliation Statement
(b) Bank Statement
(c) Cash Flow Statement
(d) Fund Flow Statement
2. Why is a bank reconciliation statement
prepared?
(a) It is generally experienced that when a
comparison is made between the bank
balance as shown in the firm’s cash book
and the bank statement, the two balances
do not tally.
(b) To find out the cash balance.
(c) To understand short term liabilities.
(d) None of the above
3. A bank reconciliation statement is
prepared by?
(a) Banker
(b) Account holder in a bank
(c) Creditor (d) Supplier
4. Which of the following points out the
need of bank reconciliation statement?
(a) It helps in locating any error that may have
been committed either in the cash book or
in the pass book.
(b) It helps in bringing out the unnecessary
delay in the collection of cheques by the
bank.
(c) It helps in avoiding embezzlements or
misappropriation of funds by regular
periodic reconciliation.
(d) All of the above
5. Pass book is a copy of.............as it
appears in the ledger of the bank.
(a) customer’s account
(b) cash book relating to cash column
(c) firm’s receipts and payments
(d) None of the above
6. A bank reconciliation statement can be
prepared with the balance of
(a) pass book
(b) cash book
(c) Both pass book and cash book
(d) None of the above
7. Reconciliation of the cash book and the
bank pass book balances amounts to an
explanation of differences between them.
(a) True (b) False
(c) Can’t say (d) Partially true
8. The differences between the cash book
and the bank pass book is caused by
(i) timing differences in recording of the
transactions.
(ii) errors made by the business or by the
bank.
(a) Only (i) (b) Only (ii)
(c) Both (i) and (ii) (d) Neither (i) nor (ii)
9. Which of the following is an example of
difference caused due to time gap in
cash book and pass book?
(a) Cheques issued by the firm to suppliers
worth ` 50,000 not presented by supplier to
the bank for payment immediately.
(b) Cheques paid into the bank of ` 75,000 but
not yet collected.
(c) Cheque collection charges worth ` 25,000
levied by bank.
(d) All of the above
10. Which of the following is an example of
difference caused due to errors in cash
book and pass book?
(a) Cheques issued by the firm to suppliers
worth ` 60,000 not presented by supplier to
the bank for payment immediately.
(b) Cheques paid into the bank of ` 93,000 but
not yet collected.
(c) Wrong totalling as ` 2,50,000 instead of
` 2,30,000 by the accountant of the firm.
(d) Cheque collection charges worth ` 45,000
levied by bank.
11. Cheque amounting to ` 5,000 issued to P
but recorded as ` 500 in the cash book is
an example of difference due to time lag.
(a) True (b) False
(c) Can’t say (d) Partially true
12. Difference caused due to bank charges
of ` 500 debited to firm’s current
account by the bank is an example of
difference caused due to time lag.
(a) True (b) False
(c) Can’t say (d) Partially true
13. Normally, the cash book shows a ………
balance while pass book shows ………
balance.
(a) debit; credit
(b) credit; debit
(c) debit; debit
(d) credit; credit
14. Favourable balance as per the cash book
means credit balance in the bank
column of the cash book.
(a) True (b) False
(c) Can’t say (d) Partially true
15. When money is withdrawn from the
bank, the bank ............. the account of
the customer.
(a) credit (b) debit
(c) Either (a) or (b) (d) No effect
16. In the bank statement, cash deposited
by a firm is shown as ……… .
(a) debit (b) credit
(c) liability (d) provision
17. Unfavourable bank balance means
(a) credit balance in pass book
(b) credit balance in cash book
(c) debit balance in cash book
(d) None of the above
18. If a cheque is not paid by the bank, it is
known as ……… .
(a) Cancelled (b) Dishonoured
(c) Honoured (d) None of these
19. If the cash book balance is taken as
starting point the items which make the
cash book balance smaller than the pass
book must be ……… for the purpose of
reconciliation.
(a) deducted (b) added
(c) multiplied (d) divided
20. If bank balance as per cash book is
` 50,000, cheques issued but not
presented for payment of ` 6,000 and
bank charges of ` 400 were not entered
in the cash book, then balance as per
pass book will be
(a) ` 50,000 (b) ` 56,000
(c) ` 55,600 (d) ` 56,400
1. (a) 2. (a) 3. (b) 4. (d) 5. (a) 6. (c) 7. (a) 8. (c) 9. (d) 10. (c)
11. (b) 12. (a) 13. (a) 14. (b) 15. (b) 16. (b) 17. (b) 18. (b) 19. (b) 20. (c)