Bank Reconciliation Quiz

What is the relationship between the Debit side of the Cash Book and the Bank Statement?

• Debit side Cash Book = Debit side Bank Statement

• Debit side Cash Book = Credit side Bank Statement

• Credit side Cash Book = Credit side Bank Statement

• Debit side Cash Book ≠ Bank Statement

Answer explanation

The Debit side of the Cash Book represents cash inflows, while the Credit side of the Bank Statement reflects the same. Therefore, the correct relationship is that the Debit side of the Cash Book equals the Credit side of the Bank Statement.

What type of error is corrected by debiting the Cash Book in the updated Cash Book?

• Cheque dishonored

• Wrongly credited amount

• Bank charges

• Unpresented cheque

Answer explanation

A wrongly credited amount in the Cash Book indicates that an amount was incorrectly added to the cash balance. Debiting the Cash Book corrects this error by reducing the balance to reflect the accurate amount.

What is an unpresented cheque?

• A cheque deposited but not credited by the bank

• A cheque issued but not yet cashed by the recipient

• A cheque dishonored by the bank

• A cheque wrongly credited in the Cash Book

Why might the bank statement balance differ from the cash book balance?

• Errors in the cash book

• Uncredited cheques

• Bank charges

• All of the above

Answer explanation

The bank statement balance may differ from the cash book balance due to errors in the cash book, uncredited cheques, and bank charges. Therefore, all of these factors contribute to the discrepancies.

What is the purpose of preparing a Bank Reconciliation Statement?

• To calculate the total income of the business

• To match the balance in the Cash Book with the Bank Statement

• To find errors in the Bank's records

• To record bank charges and fees

Answer explanation

The purpose of preparing a Bank Reconciliation Statement is to match the balance in the Cash Book with the Bank Statement, ensuring that both records are consistent and accurate.

What should be added when preparing a Bank Reconciliation Statement?

• Bank charges

• Uncredited cheques

• Unpresented cheques

• Dishonored cheques

Answer explanation

Unpresented cheques should be added in a Bank Reconciliation Statement as they represent amounts that have been issued but not yet cleared by the bank, affecting the balance.

If a cheque is dishonored, how should it be recorded in the updated Cash Book?

• Debit the Cash Book

• Credit the Cash Book

• Ignore it in the Cash Book

• None of the above

Answer explanation

When a cheque is dishonored, it indicates that the cash expected is not received. Therefore, you should credit the Cash Book to reflect the decrease in cash balance.

What is a direct debit in a Bank Reconciliation Statement?

• A payment the business receives from a customer

• An automatic deduction made by the bank for bills or services

• A cheque issued but not presented

• A fee charged by the bank

Answer explanation

A direct debit is an automatic deduction made by the bank for bills or services, allowing businesses to pay recurring expenses without manual intervention. This distinguishes it from payments received or fees charged.

Which of the following is recorded as an error in the Cash Book?

• Unpresented cheque

• Dishonored cheque

• Wrongly debited amount

• Bank charges

Answer explanation

A wrongly debited amount is an error in the Cash Book because it indicates an incorrect entry that affects the cash balance. Unpresented and dishonored cheques do not directly impact the Cash Book's recorded amounts.

What is the effect of a bank charge on the Cash Book?

• It increases the Cash Book balance

• It decreases the Cash Book balance

• It has no effect on the Cash Book

• It is recorded as an asset