THE PROFESSIONALS’ ACADEMY OF COMMERCE

Introduction to Accounting
Class Test Spring-2020
Section : online 20 marks – 40 mins

Q1

On 30 June 2015, the bank column of AA Trader's Bank Book showed a credit balance of Rs.109,860. This
balance did not agree with the balance appearing on the Bank Statement as at that date. Upon investigation,
you found the following errors:

1. The list of cheques issued during the month of June, showed a total of Rs. 180,000. Out of these, cheques
amounting to Rs. 120,000 had been presented for payment till 30 June 2015. Outstanding cheques as on
30 June 2015, included a cheque for Rs. 40,000 bearing an incorrect supplier's name. The cheque was
returned and recorded on 10 July 2015.
2. Cheques deposited but not credited by the bank amounted to Rs. 120,000. One of the un-credited
cheques was received from a debtor, Mr. Amir, who availed settlement discount of 5%. The receipt was
recorded at gross amount of invoice at Rs. 20,000 in the cash book.
3. The bank had erroneously debited AA Trader's account with a Standing Order payment of Rs. 46,200 on
behalf of ABC Traders on 12 June 2015.
4. The credit side of the Bank Book was over cast by Rs.22,500.
5. AA Traders received a debit advice of Rs.15,000 from the bank for bank charges deducted by the bank
for the month of June. No entry had been passed in the books for this.
6. The bank paid annual subscription for an accounting magazine amounting to Rs.50,000 as per the
standing order instructions of the business. No entry had been made in the business' books.
7. AA Traders had issued a cheque amounting to Rs. 75,000 to Mr. Salman, a creditor on 20 December 2013.
The cheque stood un-presented by 30 June 2015. No adjustments had been made.
8. There were no outstanding cheques other than those mentioned in points 1 and 7.
9. The junior accountant passed an entry for the issue of a cheque for payment for Rs. 135,000. The cheque
was dated 15 July 2015.
Required:
a. Prepare a bank reconciliation statement as on 30 June 2015. (13)
b. What is the balance appearing in the bank statement on 30 June 2015? (1)
c. What amount should be recorded in the statement of financial position as bank balance? (1)
Q2

1. A business is in process of reconciling its cash book with banks statement.

Which of the following item require entry in cash book?
(a) Bank service charges
(b) Deposits credited by the bank after the date of the bank statement
(c) Cheque of another account erroneously credited by bank
(d) Cheques presented by suppliers after the date of bank statement

2. If it was found that the receipt side of the cash book has been under-casted, then in preparing bank
reconciliation statement, it should be:

(a) Deducted from balance as per cash book

(b) Added in balance as per bank statement

(c) Added in balance as per cash book

(d) Deducted from balance as per bank statement

3)Which of the following statements is correct?

(a) Credit balance as per bank statement means a bank overdraft

(b) Debit balance as per bank statement means a bank overdraft

(c) Debit balance as per cash book means a bank overdraft

(d) Credit balance as per cash book means an asset

4) Which of the following require deduction from cash book balance while preparing bank
reconciliation statement?

a) Direct deposit by a customer into bank but entered in cash book

b) Standing orders paid by the bank not yet entered in cash book

c) Unpresented cheques not yet paid by bank

d) Bank debits interest Rs. 2,500 instead of Rs. 5,200

5)Bank Reconciliation Statement is prepared by

(a) Bank

(b) Accountant

(c) Customer

(d) Auditors