MCQs on Cashbook

The primary purpose of a cashbook is to record cash transactions occurring in a business organisation. It acts both as a journal and a ledger for cash inflows and outflows. A cashbook follows the dual entry accounting system, and it is also an alternative to a cash account.

We have compiled a list of multiple-choice questions and answers on cashbook to help students get a grip on this topic:

  1. Which of the following statements is true about the balance in the petty cash account?
    1. It is a liability
    2. It is an asset
    3. It is an expense
    4. None of the above
  2. Answer: b

  3. What is the primary purpose of a cashbook?
    1. It records receipts and payments of cash
    2. It records payments of cash
    3. It records receipts of cash
    4. It helps to compute the profit and loss of a business
  4. Answer: a

  5. Which of the following is not a part of ‘cash and cash equivalents’ in a cashbook?
    1. Special investments
    2. Cheques
    3. Money orders
    4. Coins
  6. Answer: a

  7. A cashbook serves the following purpose:
    1. It works as a ledger account
    2. It works as a book of original entry as well as a ledger account
    3. It works as a book of original entry
    4. None of the above
  8. Answer: b

  9. Which of the following statements about cash is correct?
    1. The business activities involve regular cash transactions
    2. Cash is a current asset that can meet the immediate obligations of a business
    3. Cash is universally accepted as a mode of payment
    4. All of the above
  10. Answer: d

  11. Which of the following cashbooks is similar to a cash account?
    1. Double column cashbook
    2. Triple column cashbook
    3. Petty cashbook
    4. Single column cashbook
  12. Answer: d

  13. The credit side of a cashbook is ________:
    1. The loss side
    2. The receipt side
    3. The profit side
    4. The payment side
  14. Answer: d

  15. Once you add a bank column to both sides of a single cashbook, it becomes a _______:
    1. Petty cashbook
    2. Double column cashbook
    3. Triple column cashbook
    4. None of the above
  16. Answer: b

  17. In a three column cashbook, the ______ column is not balanced:
    1. Discount column
    2. Cash column
    3. Bank column
    4. None of the above
  18. Answer: a

  19. In a cashbook, a contra entry involves __________:
    1. A cash account and a bank account
    2. A cash account and a sales account
    3. A cash account and a discount account
    4. A bank account and a discount account
  20. Answer: a

  21. In a cashbook, a contra entry is recorded on the __________:
    1. Debit and credit side of a cashbook
    2. Debit side of a cashbook
    3. Credit side of a cashbook
    4. Not recorded in the cashbook
  22. Answer: a

  23. The transaction that does not affect a cashbook is ___________:
    1. Cheque received from Mr B and deposited in the bank
    2. Depreciation expense recorded for the year
    3. Mobile charges paid from the online company’s bank account
    4. Cash paid to creditors for goods purchased from them
  24. Answer: b

  25. Which one of the following transactions will be recorded in the cashbook as a contra entry?
    1. Cash is withdrawn from the bank for office use
    2. Cash is deposited in a company’s bank account
    3. A cheque that was received earlier is deposited into the company’s bank account
    4. All of the above
  26. Answer: d

  27. A cashbook that records minor expenses of a business on a day-to-day basis is a ________:
    1. Petty cashbook
    2. General cashbook
    3. Extra cashbook
    4. Additional cashbook
  28. Answer: a

  29. The person who is responsible for recording transactions in a petty cash book is a ____________:
    1. Counter cashier
    2. General cashier
    3. Additional cashier
    4. Petty cashier
  30. Answer: d

  31. Another name for the debit side of a cashbook is ________:
    1. Receipts side
    2. Income side
    3. Expense side
    4. Payment side
  32. Answer: a

  33. Which of the following details is not posted in a ledger?
    1. Total of the discount column on the credit side
    2. Total of the discount column on the debit side
    3. Opening and closing balances of the cashbook
    4. All of the above
  34. Answer: c

  35. A company issues a cheque for paying a creditor. What is the effect of that transaction?
    1. Increase in assets, decrease in liabilities
    2. Decrease in assets, decrease in liabilities
    3. Increase in assets and stockholder’s equity
    4. Increase in assets, increase in liabilities
  36. Answer: b

  37. A cheque is received from a creditor and paid into the bank on the same day. How will this transaction be recorded in the cashbook?
    1. It will be recorded in the cash column of the cashbook
    2. It will be recorded both in the cash and bank column of the cashbook
    3. It will be recorded in the bank column of the cashbook
    4. None of the above
  38. Answer: c

  39. Which of the following statements about a cashbook is not true?
    1. It is a journalised ledger
    2. It is a double purpose book
    3. It is a dual book
    4. It records liabilities
  40. Answer: d

  41. How do we record the overdrawn balance of a cashbook?
    1. It is credited if the balance is mentioned as an overdrawn balance
    2. If debit or credit balance is not mentioned, then it will be an overdrawn balance
    3. If an overdraft balance is mentioned, then it will be debited on the debit side of the cashbook
    4. None of the above
  42. Answer: a

  43. Which of the following transactions will not be included in the cashbook?
    1. Cash receipt from Anil for Rs. 40000
    2. Purchases worth Rs. 30000
    3. Credit sales worth Rs. 20000
    4. Cash sales worth Rs. 40000
  44. Answer: c

  45. The amount mentioned in the discount column on the debit side of a cashbook represents:
    1. Trade discount allowed or discount expense
    2. Cash discount allowed or discount expense
    3. Trade discount received or discount income
    4. Cash discount received or discount income
  46. Answer: b

  47. The total of the discount column on the debit side of a cashbook is posted to the:
    1. Debit side of the discount allowed account in the ledger
    2. Credit side of the discount allowed account in the ledger
    3. Debit side of the discount received account in the ledger
    4. Credit side of the discount received account in the ledger
  48. Answer: a

  49. A firm that properly maintains its cashbook does not need to maintain:
    1. Cash payment journal
    2. Cash account in the ledger
    3. Cash receipt journal
    4. All of the above
  50. Answer: d

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