IGCSE Accounting Paper-1: Specimen Questions with Answers 267 - 267 of 338
Passage
The bank column of Abhay Nigam’s cash book had a credit balance brought down of $1450 on 1 April 2019. The bank statement on the same date showed a debit balance of $230.
Following things were discovered by Abhay when he compared his cash book with the bank statement-
Items on the bank statement but not in the cash book-
Bank charges of $100
Dividend received $500
Insurance premium paid by bank $200
Direct deposit of $1000 by Robert, a customer
Items in the cash book but not in the bank statement-
Cheque received from Kundan of $250 was recorded twice in the cash book.
Cheque issued to Namrata $850, a credit supplier
Cash deposited $120
Question number: 267 (4 of 6 Based on Passage) Show Passage
True-False▾
Statements
Pay in Slip is used to withdraw cash from bank. (Marks 4)
Debit side of cash book represents payments and credit side represents receipts of cash transactions.
Cash withdrawn from bank for personal use is not a contra entry.
Bank Reconciliation is a part of double entry system.
Choices
| Choice (4) | |
|---|---|
a. | Both statement Ⅱ & statement Ⅳ are true. |
b. | Only statement Ⅱ is true. |
c. | Both statement Ⅲ & statement Ⅳ are true. |
d. | Only statement Ⅲ is true. |
Answer
d.Explanation
True/False | |
(I) Pay in Slip is used to withdraw cash from bank. | False |
(II) Debit side of cash book represents payments and credit side represents receipts of cash transactions. | False |
(III) Cash withdrawn from bank for personal use is not a contra entry. | True |
(IV) Bank Reconciliation is a part of double entry system. | False |
Pay in Slip is used to deposit either cash or cheque of customers for collection of payments in the bank account.
Debit side of cash book represents receipts and credit side represents payments of cash transactions.
Cash withdrawn from bank for personal use is debited to Drawings A/c and not cash A/c. So, it will be a contra entry because both Cash A/c and Bank A/c are not involved.
Bank Reconciliation Statement is not a part of double entry system. It is mere a statement prepared to reconcile the bank balances shown by the cash book and that by the bank statement.