Test Your Understanding · Q1
Q.Select the Correct Answer:
(a) When a firm maintains a cash book, it need not maintain:
(i) Journal Proper
(ii) Purchases (journal) book
(iii) Sales (journal) book
(iv) Bank and cash account in the ledger
(b) Double column cash book records:
(i) All transactions
(ii) Cash and bank transactions
(iii) Only cash transactions
(iv) Only credit transactions
(c) Goods purchased on cash are recorded in the:
(i) Purchases (journal) book
(ii) Sales (journal) book
(iii) Cash book
(iv) Purchases return (journal) book
(d) Cash book does not record transaction of:
(i) Cash nature
(ii) Credit nature
(iii) Cash and credit nature
(iv) None of these
(e) Total of these transactions is posted in purchase account:
(i) Purchase of furniture
(ii) Cash and credit purchase
(iii) Purchases return
(iv) Purchase of stationery
(f) The periodic total of sales return journal is posted to:
(i) Sales account
(ii) Goods account
(iii) Purchases return account
(iv) Sales return account
(g) Credit balance of bank account in cash book shows:
(i) Overdraft
(ii) Cash deposited in our bank
(iii) Cash withdrawn from bank
(iv) None of these
(h) The periodic total of purchases return journal is posted to:
(i) Purchase account
(ii) Profit and loss account
(iii) Purchase returns account
(iv) Furniture account
(i) Balancing of account means:
(i) Total of debit side
(ii) Total of credit side
(iii) Difference in total of debit & credit
(iv) None of these
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20% · 9/45 Questions
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Reasoning
| Part | Answer | Reason |
|---|---|---|
| (a) | (iv) | The cash book is the cash and bank account, so a separate cash/bank account is not opened in the ledger. |
| (b) | (ii) | A double (two) column cash book has a Cash column and a Bank column. |
| (c) | (iii) | Cash purchases are recorded in the cash book; only credit purchases go in the purchases book. |
| (d) | (ii) | The cash book records only cash/bank transactions, never purely credit transactions. |
| (e) | (ii) | The Purchases Account collects cash and credit purchases of goods (not furniture, stationery or returns). |
| (f) | (iv) | The periodic total of the sales return journal is posted to the Sales Return Account. |
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