Cash Book - 1 - Free MCQ Practice Test with solutions, SSC CGL

The correct option is C.

Imprest amount=500

Expenses=Telephone expenses+tiffin+small repairs +general expenses=150+50+30+100=330

Amount of reimbursement=Amount to be paid=₹300

A contra entry in a three-column Cash Book occurs when a transaction affects both the cash and bank columns, such as when cash is withdrawn from the bank for office use or when cash is deposited into the bank. Withdrawal of cash from bank for office use is a contra entry because it involves both cash and bank accounts within the same business. Payment to creditors is not a contra entry, and withdrawal of cash from bank for personal use is a personal transaction, not recorded as a contra entry in the Cash Book.

Option C is correct.

Cash Book is a book of original entry where all transactions involving cash are recorded.

Specifically, it records both cash receipts and cash payments in chronological order.

Because the cash book functions as both a journal for cash transactions and a cash ledger, separate posting to the cash ledger for these entries is not required.

Therefore, it correctly records both cash receipts and cash payments, which makes Option C the right choice.

It is treated as cash received on the date of receipt and recorded in the cash column on receipts side. When the cheque is deposited the entry for deposit will be passed on the day of depositing the cheque into bank.

Cash Book records all cash transactions. Cash (asset) can never be negative; therefore, it always shows a debit balance (cash in hand). If the book shows zero balance, it means no cash is available. A credit balance in cash column is not possible, though in bank column (in case of overdraft) credit balance may appear.

Description: Correct Entry:
Cash A/c Dr. 100
To Interest A/c 100
( Being interest received)
Wrong Entry:
Interest A/c Dr. 100 
To Cash A/c 100
( Being interest paid)
The effect of the above wrong entry will be that cash balance will be reduced by Rs. 200.

Cash Book is a special journal as well as a ledger. It records all cash transactions directly, showing cash and bank balances. Contra entries (like cash deposited into bank or withdrawn from bank) are also recorded in Double or Triple Column Cash Book, so option (d) is incorrect.

In Cash Book, the Debit side represents receipts (cash inflows), and the Credit side represents payments (cash outflows). Hence, all payments are recorded on the Credit side of the Cash Book.

Deposit into bank means cash decreases and bank balance increases. In Double Column Cash Book, a contra entry (C) is passed:

• Bank A/c (Dr.) – on the Debit side
• Cash A/c (Cr.) – on the Credit side

A Triple Column Cash Book has three columns on each side:

• Cash
• Bank
• Discount

Purchases are recorded in Purchases Account and not in Cash Book.

Differences arise due to timing and recording differences:

• Cheques deposited but not cleared → increases balance in Cash Book but not in Pass Book.
• Cheques issued but not presented → decreases balance in Cash Book but not yet in Pass Book.
• Bank charges → recorded by bank but not entered in Cash Book unless updated.

Hence, all options are correct.

Correct option: B

A contra entry is a transaction that affects both the Cash and Bank accounts and is recorded on both sides of the three-column cash book.

These entries represent transfers between cash and bank, for example a cash deposit into the bank or a withdrawal from the bank; such transactions are marked as contra and appear in both columns.

Transactions that affect only one of these accounts-such as paying salaries in cash, making credit sales, or paying a creditor by cheque-are recorded in the cash book but are not contra entries because they do not simultaneously debit and credit the Cash and Bank columns.

Therefore, option B is correct.