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
21
What is another common term for unpresented checks in bank reconciliation?
Answer:
Outstanding checks
Unpresented checks are checks that have been issued and recorded in the business's cash book but have not yet been presented to the bank for payment. These are commonly referred to as 'outstanding checks' because they are still 'out' in the system and have not yet cleared the bank account.
22
What is the term for cheques that have been deposited into the bank but have not yet been processed or credited to the account?
Answer:
Uncredited checks
Uncredited cheques, also known as cheques paid into the bank but not yet cleared, are a common cause of discrepancy between the cash book and the bank statement. The business records the receipt in its cash book immediately upon deposit, but the bank only reflects the increase in the account balance once the clearing process is complete.
23
How should unrecorded bank charges be adjusted within the cash book?
Answer:
Bank charges will be credited in cash book
Bank charges represent an expense to the business and a reduction in the bank balance. Since the bank has already deducted these charges from the account, the business must record this reduction in its cash book. Crediting the cash book reduces the asset balance, accurately reflecting the lower amount of cash available after the bank's service fees.
24
Leo Ltd. issued a cheque for 1,340.56 to a creditor, but the bank processed it as 3,140.56. If no rectification entry is made and the error remains undetected in the bank reconciliation, what is the resulting impact?
Answer:
The favorable bank balance as per Pass Book is less than the Bank balance as per Cash book
The bank deducted a larger amount (3,140.56) from the account than the company recorded in its cash book (1,340.56). Consequently, the bank balance shown in the Pass Book will be lower than the balance reflected in the company's Cash Book. This discrepancy arises because the bank processed a higher payment amount than the company's internal records indicated.