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Question

State whether the following statements are true or false.

1) Cash memo is used for credit purchase/sale.
2) A receipt is used for cash sales.
3) Crossed cheque is a very safe cheque.
4) A voucher is a document in support of an entry in the books of account.
5) Only withdrawal slip is used to withdraw the amount from the bank.
6) A bearer cheque is just like a withdrawal slip.


Solution

(1) False
Explanation:
Cash memos are used for cash purchases/sales. In order to record the credit purchases / sales, an invoices or bills are prepared by the seller.

(2) False
Explanation:
A receipt is issued by a receiver (or seller of goods) to a customer whenever any amount of cash is received from the customer. It acts as a proof in the hands of the customer that he/she has paid the seller of goods the amount specified in the receipt.

(3) True
Explanation:
A crossed cheque is a very safe cheque, as it is crossed with two parallel lines, either across the whole cheque or at the top left-hand corner of the cheque. This indicates that the cheque can only be deposited directly in the Bank Account of the person whose name is mentioned on the cheque and cannot be immediately cashed by a bank or any other credit institution, unlike in the case of bearer cheque.
Therefore, a crossed cheque is a very safe cheque.

(4) True
Explanation:
Voucher is a source document, on the basis of which, entries are recorded in the primary books, i.e. Journal or other Subsidiary Books. It acts as evidence of a transaction. It is a written proof that a particular transaction actually took place. Vouchers are separately printed by firms in their own names and a serial number is assigned to each voucher and related source documents are attached with the vouchers, on the basis of which, entries are made in the books of accounts.

(5) False
Explanation:
This statement is false, as money can be withdrawn from a bank either through a withdrawal slip or a cheque. In fact, a bearer cheque is just like a withdrawal slip, as any person possessing the cheque will be paid when he/she deposits in a bank. Thus, it is not necessary that only a withdrawal slip can be used to withdraw money from a bank.

(6) True
Explanation:
A bearer cheque is the cheque through which money can be paid to any person who is holding the cheque and presents the cheque for payment. A withdrawal slip is used to withdraw money from a bank. Thus, a bearer cheque is just like a withdrawal slip; a person holding the cheque or slip, upon presenting it in the bank, is entitled to be paid.

Accountancy
B.Keeping & Account (2014)
Standard XI

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