Cash and Bank Accounting Revision Questions

Cash and Bank Accounting Revision Questions

1)  Which one of the following is not a bank account?

1. A current account
2. A deposit account
3. A cash account
4. An expense account

Answer

2)  To which one of the following categories does your Bank account belong?

1. Liabilities
2. Assets
3. Capital
4. Expenses

Answer

3)  You buy stationary for cash.  Which one of the following groups of accounts are affected?

1. Office Supplies/Current/VAT
2. Credit Card/Office Supplies/VAT
3. Cash/VAT/Office Supplies
4. Expenses/Office Supplies/VAT

Answer

4)  When you transfer money between one type of Bank account and another, both are debited.

1. True
2. False

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5)  You transfer money from your Deposit account to your Current account.  Which one of the following statements is true?

1. The Deposit account is credited and the Current account is debited
2. The Deposit account is debited and the Current account is credited
3. The Deposit account is credited and the Current account is credited
4. The Deposit account is debited and the Current account is debited

Answer

6)  When you pay bank charges on your Deposit account, which one of the following statements is correct?

1. The Bank Charges account is not affected
2. The Bank Charges account is debited
3. The Bank Charges account is credited
4. The Deposit account is debited

Answer

7)  You make a non-credit purchase by cheque.  Which one of the following statements is correct?

1. The Current account is debited and the Purchase account is credited
2. The Current account is credited and the Purchase account is credited
3. The Current account is credited and the Purchase account is debited
4. None of the above

Answer

8)  You pay an amount off your credit card bill by cheque.  Which one of the following statements is true?

1. The Current account is credited and the Credit Card account is debited
2. The Current account is debited and the Credit Card account is credited
3. The Current account is credited and the Credit Card account is credited
4. The Current account is debited and the Credit Card account is debited

Answer

9)  You pay £500 off your credit card bill by cheque and transfer £1000 from your Deposit account to your Current account.  Which one of the following statements is correct?

1. The Credit Card account is debited; The Deposit account is credited; The Current account is credited
2. The Credit Card account is credited; The Deposit account is credited; The Current account is credited
3. The Credit Card account is debited; The Deposit account is debited; The Current account is credited
4. The Credit Card account is debited; The Deposit account is credited; The Current account is credited and debited

Answer

Cash / Bank Accounting Revision Answers

1)  Option (d) is correct.  An expense account is an ordinary account.  It is not a "money account".

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2)  Option (b) is correct.  Money you have in the bank is money you own.  Anything you own is an asset.

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3)  Option (c) is correct.  You would not record this in your Current account, as it is a cash transaction.  Nor has it anything to do with your credit card.

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4)  Option (b) is correct.  This is false.  The account receiving the money is debited, and the account giving the money is credited.

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5)  Option (a) is correct.  The Deposit account is credited as the money is coming out of this account.  The Current account is debited as the money is going into it.

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6)  Option (b) is correct.  Bank Charges are an expense.  An increase in an expense is shown as a debit on the expense account.

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7)  Option (c) is correct.  The Current account is credited as the money is going out of this account.  The double entry will be on the debit of the Purchases account.

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8)  Option (a) is correct.  The Current account is credited as the money is going out of this account.  The Credit Card account is debited as the money is coming into it.

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9)  Option (d) is correct.  The Credit Card account is treated as a Liability account.  It is decreasing and debited with £500.  The Deposit account is an Asset account.  It is decreasing, so it is credited with £1000.  The Current account is an Asset account.  It is credited with the payment of £500 and is debited with the transfer of £1000.

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