TOPIC 6

ACCOUNTING FOR CASH

MULTIPLE CHOICE QUESTION

1.A cheque written by the company for RM167 is incorrectly recorded by a company as
RM176. On the bank reconciliation, the RM9 error should be
a. added to the balance per books.
b. deducted from the balance per books.
c. added to the balance per bank.
d. deducted from the balance per bank.

2.For which of the following errors should the appropriate amount be added to the balance
per bank on a bank reconciliation?
a. Cheque for RM63 recorded by the company as RM36.
b. Deposit of RM600 recorded by the bank as RM60.
c. A returned RM300 cheque recorded by the bank as RM30.
d. Cheque for RM75 recorded by the company as RM57.
Question 3 and 4 using the information below:
Abdullah Company gathered the following reconciling information in preparing its October
bank reconciliation:
RM

Cash balance per books, 10/31 16,800

Deposits in transit 600

Notes receivable and interest collected by bank 3,400

Bank charge for cheque printing 80

Outstanding cheques 8,000

NSF cheque 680

3.The adjusted cash balance per books on October 31 is

a. RM18,840.
b. RM16,040.
c. RM11,440.
d. RM19,440.
4. Which of the following items on a bank reconciliation would require an adjusting entry on
the company’s books?
a. An error by the bank.
b. Outstanding cheques.
c. A bank service charge.
d. A deposit in transit

5. Which of the following is not an internal control procedure for cash?

a. Payments should be made with cash.
b. There should be limited access to cash.
c. The amount of cash on hand should be kept to a minimum.
d. Cash should be deposited daily.

6. On April 30, the bank reconciliation of Bakhtiar Company shows three outstanding
cheques: no. 354, RM650, no. 355, RM920, and no. 357, RM615. The month of May bank
statement and cash payments journal show the following:

Bank Statement ( Cheques paid )

Date Cheque Amount (RM)

number

May 4 354 650

2 357 615

17 358 159

12 359 275

20 360 890

29 363 480

30 362 750

Cash Payment Journal ( issued cheque )

Date Cheque Amount (RM)

number

May 2 358 159

5 359 275
 10 360 890

15 361 800

22 362 750

24 363 480

29 364 840

What is the total amount of outstanding cheques at May 31?

a. RM1,720
b. RM1,760
c. RM2,560
d. RM3,210

7.A company recorded its cheque no. 2754 in its accounting records as RM98. However,
cheque no. 2754 was actually written for RM89 and it cleared the bank as RM89. What
adjustment is needed to the Cash balance per books?
a. Decrease by RM9
b. Increase by RM9
c. Decrease by RM89
d. Increase by RM89

8. A company deposited a cheque from a customer into its checking account. A few days
later the cheque was returned with the notation "Account Closed" and the bank deducted the
amount on the bank statement.
a. Add to Book Balance
b. Deduct from Book Balance
c. Add to Bank Balance
d. Deduct from Bank Balance
Question 9 – 13 using the information below:
Edel Enterprise reported the following extract of the bank reconciliation statement as at 31
October 2020:

Edel Enterprise
Bank Reconciliation Statement as at 31 October 2020
RM RM
Bank balance as per bank statement 6,510
Less: Outstanding cheques/unpresented cheques
Cheque No. 120072 904
Cheque No. 120073 576 (1,480)
Adjusted bank balance as per bank statement 5,030

The following information was extracted from the accounting books of Edel Enterprise for the
month of November 2020:

Cash Receipt Journal

Date Particulars Cheque no. Amount (RM)
 November 2 Ilhan 120074 520
4 Ghafir 258787 600
14 Hafis 480217 2,000
19 Farrah 105414 360
26 Syafina 544600 200
3,680

Cash Payment Journal

Date Particulars Cheque No. Amount (RM)
November 7 Syazwan 120075 1,000
23 Aiman 120076 440
28 Thaqif 120077 650
2,090

The following is the bank statement received in early December 2020:

Trusted Bank Berhad

Bank Statement for the month of November 2020
Date Transactions Cheque Debit Credit Balance
no. RM RM RM
November 1 Beginning balance - - - 6,510
2 Cheque clearing 120072 904 5,606
3 Cheque clearing 120073 576 5,030
4 Cheque clearing 120074 520 4,510
6 Cheque deposited 258787 1,000 5,510
10 Direct debit 3,400 2,110
17 Credit transfer 240 2,350
18 Bank charges 450 1,900
22 Cheque deposited 105414 360 2,260
29 Cheque deposited 544600 200 2,460
30 Dishonoured cheque 544600 200 2,260
30 Credit transfer 700 2,960
30 Cheque clearing 120076 440 2,520
30 Cheque clearing 120077 650 1,870

All records made by the bank were correct except for the credit transfer on 30 November
which did not belong to Edel Enterprise.

9. Beginning balance for Cash Book Account on November 2020 is

a. RM5,030
b. RM6,510
c. RM6,620
d. RM2,090

10. What is the amount of Bank balance as per book in Statement of Bank Reconciliation
November 2020?

a. RM5,030
b. RM6,510
c. RM6,620
 d. RM2,090

11. A company deposited a cheque ( cheque no:544600) from a customer into its Cash
Book. A few days later the cheque was returned with the notation "Non Sufficient Fund" and
the bank deducted the amount on the bank statement.

a. Add to Book Balance RM200

b. Deduct from Book Balance RM200
c. Add to Bank Balance RM1,000
d. Deduct from Bank Balance RM1,000

12. A cheque no: 120074 issued by the company for RM520 is incorrectly recorded in Cash
Receipt Journal. On the bank reconciliation, the error should be
a. Added RM1,040 to the balance per books.
b. Deducted RM1,040 from the balance per books.
c. Added RM1,040 to the balance per bank.
d. Deducted RM1,040 from the balance per bank.

13. A cheque no: 258787 deposited by the company for RM1,000 is incorrectly recorded in
Cash Receipt Journal amounted RM600. On the bank reconciliation, the error should be
a. Added to the balance per books.
b. Deducted from the balance per books.
c. Added to the balance per bank.
d. Deducted from the balance per bank.
14. If balance in the bank statement shows RM 3,000 (Dr.) and there are deposits of RM 800
not yet credited and unpresented cheques totalling RM 500, the Adjusted balance as per
books should be   
a. RM 3,300 (Cr)
b. RM 2,700 (Cr)
c. RM 4,300 (Cr)
d. RM 1,700 (Dr)

15. Cash book balance was RM 1,790 (Dr). When compared with the bank statement, it was
identified that unpresented cheques were RM 1,040 and deposits not credited were RM 820.
Balance of the bank statement will   
a. RM 70 (Dr)
b. RM 1,570 (Cr)
c. RM 2,010 (Cr)
d. RM 3,650 (Cr)

16. Mohan’s bank reconciliation statement shows cheques deposited but not credited by
bank of RM3,800 and cheques issued but not presented by suppliers of RM3,500. His bank
balance as per Cash Book is RM25,000. Balance as per bank statement is   
a. RM25,000.
 b. RM24,700.
c. RM25,300.
d. RM32,300.
17. The credit balance as per Cash Book is RM 1,500. Cheques for RM400 were deposited
but were not collected. The cheques issued but not presented were RM100, RM125 and
RM50. Balance as per Bank Statement will be : 
a. RM1,100 Dr
b. RM1,625 Dr
c. RM2,175 Cr
d. RM1,625 Cr

18. Cash book shows an overdraft of RM1,000. On receipt of bank statement, it was
identified that one of the customers has directly deposited RM400 into the account and bank
charges of RM20 had been debited by the bank. The balance as per bank statement is RM
__________________.
a. RM1,380 Dr
b. RM620 Dr
c. RM1,420 Dr
d. RM620 Cr
19. The date of preparing Bank Reconciliation Statement is 31st March 2020. State the
amount of cheques paid into bank but not credited by the bank if four cheques amounting to
RM20,000 are deposited on 28 March 2020 out of which two cheques amounting to
RM7,500 were credited on 3rd April 2020.
a. RM27,500
b. RM12,500
c. RM20,000
d. RM7,500
Question 20 – 22 using data information below:
Sani Food and Supplies
Bank Reconciliation at 31 January 2020
RM RM
Cash balance per bank statement 1,697
Add: Deposits in transit/uncredited cheques
Sales 1,182
Sales 603 1,785
3,482
Less: Outstanding cheques/unpresented
cheques
Purchases (620907) 812
Water and electricity (620908) 751 1,563
Adjusted cash balance per bank 1,919

Cash balance per books 652

Add: Credit transfer 8,476
 Dividend 1,418 9,894
10,546

Less: Bounce cheque 4,453

Insurance 612
Bank charges 42
Standing order-Loans 3,520 8,627
Adjusted cash balance per books 1,919

20. Choose the correct answer to record adjusting entry for Credit transfer
a. Dr Accounts Payable ; Cr Bank
b. Dr Credit transfer ; Cr Bank
c. Dr Bank ; Cr Accounts Receivable
d. Dr Bank ; Accounts Payable
21. Choose the incorrect answer to record adjusting entry
a. Dr Bank ; Cr Dividend receive
b. Dr Bank ; Cr Accounts Receivable
c. Dr Bank charges ; Cr Bank
d. Dr Loans ; Cr Bank
22. Adjusting entry for Bounce Cheque is
a. Dr Bank ; Cr Accounts Receivable
b. Dr Accounts Receivable ; Cr Bank
c. Dr Bank ; Cr Accounts Payable
d. Dr Bounce cheque ; Cr Bank
23. A company recorded its cheque #2754 in its cash book as RM98. However, cheque
#2754 was actually written and cleared by the bank as RM89. What adjustment is needed to
the Cash balance per books?
a. Decrease By RM9
b. Increase By RM9
c. Decrease By RM98
d. Increase By RM98

24. A company had a receipt of RM989 and correctly prepared its bank deposit slip for
RM989. However, the company recorded the receipt in its Cash account as RM998. How is
the difference of RM9 handled on the bank reconciliation?
a. Add To BOOK Balance
b. Deduct From BOOK Balance
c. Add To BANK Balance
d. Deduct From BANK Balance

25. A company recorded its August 15 receipts on its books as RM165. However, the
receipts were actually RM156. The deposit slip for the bank was prepared correctly as
RM156. What adjustment is needed to the Cash balance per books?

a. Decrease By RM9
b. Increase By RM9
 c. Increase By RM989
d. Decrease By RM989

26. The reconciling item in a bank reconciliation that will result in an adjusting entry by the
depositor is:

a. outstanding cheque
b. deposit in transit.
c. a bank error.
d. bank service charges

27. A cheque written by the company for RM167 is incorrectly recorded by a company as
RM176. On the bank reconciliation, the RM9 error should be

a. Add To BOOK Balance

b. Deduct From BOOK Balance
c. Add To BANK Balance
d. Deduct From BANK Balance

28. For which of the following errors should the appropriate amount be added to the balance
per bank on a bank reconciliation?
a. Cheque for RM63 recorded by the company as RM36.
b. Deposit of RM600 recorded by the bank as RM60.
c. A returned RM300 cheque recorded by the bank as RM30.
d. Cheque for RM75 recorded by the company as RM57.

29. A NSF check should appear in which section of the bank reconciliation?
a. Addition to the balance per books.
b. Deduction from the balance per bank.
c. Addition to the balance per bank.
d. Deduction from the balance per books.

30. Which of the following items on a bank reconciliation would require an adjusting entry on
the company’s books?
a. An error by the bank.
b. Outstanding cheques.
c. A bank service charge.
d. A deposit in transit