CA Foundation Exam > CA Foundation Questions > Which of the followings may be deducted when ...
Start Learning for Free
Which of the followings may be deducted when starting point is overdraft as per cash book?
- a)Cheques issued but not presented
- b)Dividends etc. collected by the bank
- c)Direct Deposits made into bank etc.
- d)All of these
Correct answer is option 'D'. Can you explain this answer?
| FREE This question is part of | Download PDF Attempt this Test |
Most Upvoted Answer
Which of the followings may be deducted when starting point is overdra...
Deductions in Overdraft as per Cash Book
When the starting point in the cash book is an overdraft, there are certain items that may be deducted. Let's explore each option mentioned and understand why they are deducted.
a) Cheques issued but not presented:
- When a company issues a cheque, it is recorded in the cash book as an outflow of cash. However, if the cheque has not been presented to the bank for payment by the end of the accounting period, it is considered outstanding.
- Outstanding cheques are deducted from the bank balance in the cash book because the bank has not yet reduced the company's account balance to honor those cheques.
- The deduction of outstanding cheques is necessary to reflect the actual bank balance available to the company.
b) Dividends etc. collected by the bank:
- Sometimes, companies authorize the bank to collect dividends, rent, or other payments on their behalf. When the bank collects these amounts, it directly credits the company's account.
- Since the bank has already collected these amounts, they should not be deducted from the bank balance in the cash book. Therefore, they are excluded from the starting point when calculating the overdraft.
c) Direct Deposits made into bank etc.:
- Direct deposits refer to payments made directly into the company's bank account, such as customer payments or loans received.
- These deposits increase the company's bank balance, and therefore, they should not be deducted from the starting point in the cash book.
d) All of these:
- Option 'D' states that all the mentioned items may be deducted when starting point is an overdraft.
- This option is correct because outstanding cheques, dividends collected by the bank, and direct deposits made into the bank are the typical deductions made when calculating the actual bank balance from an overdraft starting point.
In conclusion, when the starting point in the cash book is an overdraft, outstanding cheques are deducted to reflect the actual bank balance. However, dividends collected by the bank and direct deposits made into the bank should not be deducted as they increase the bank balance. Therefore, option 'D' - All of these is the correct answer.
When the starting point in the cash book is an overdraft, there are certain items that may be deducted. Let's explore each option mentioned and understand why they are deducted.
a) Cheques issued but not presented:
- When a company issues a cheque, it is recorded in the cash book as an outflow of cash. However, if the cheque has not been presented to the bank for payment by the end of the accounting period, it is considered outstanding.
- Outstanding cheques are deducted from the bank balance in the cash book because the bank has not yet reduced the company's account balance to honor those cheques.
- The deduction of outstanding cheques is necessary to reflect the actual bank balance available to the company.
b) Dividends etc. collected by the bank:
- Sometimes, companies authorize the bank to collect dividends, rent, or other payments on their behalf. When the bank collects these amounts, it directly credits the company's account.
- Since the bank has already collected these amounts, they should not be deducted from the bank balance in the cash book. Therefore, they are excluded from the starting point when calculating the overdraft.
c) Direct Deposits made into bank etc.:
- Direct deposits refer to payments made directly into the company's bank account, such as customer payments or loans received.
- These deposits increase the company's bank balance, and therefore, they should not be deducted from the starting point in the cash book.
d) All of these:
- Option 'D' states that all the mentioned items may be deducted when starting point is an overdraft.
- This option is correct because outstanding cheques, dividends collected by the bank, and direct deposits made into the bank are the typical deductions made when calculating the actual bank balance from an overdraft starting point.
In conclusion, when the starting point in the cash book is an overdraft, outstanding cheques are deducted to reflect the actual bank balance. However, dividends collected by the bank and direct deposits made into the bank should not be deducted as they increase the bank balance. Therefore, option 'D' - All of these is the correct answer.
Attention CA Foundation Students!
To make sure you are not studying endlessly, EduRev has designed CA Foundation study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in CA Foundation.
|
Explore Courses for CA Foundation exam
|
|
Similar CA Foundation Doubts
Top Courses for CA FoundationView all
Which of the followings may be deducted when starting point is overdraft as per cash book?a) Cheques issued but not presented b) Dividends etc. collected by the bank c) Direct Deposits made into bank etc. d) All of these Correct answer is option 'D'. Can you explain this answer?
Question Description
Which of the followings may be deducted when starting point is overdraft as per cash book?a) Cheques issued but not presented b) Dividends etc. collected by the bank c) Direct Deposits made into bank etc. d) All of these Correct answer is option 'D'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Which of the followings may be deducted when starting point is overdraft as per cash book?a) Cheques issued but not presented b) Dividends etc. collected by the bank c) Direct Deposits made into bank etc. d) All of these Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the followings may be deducted when starting point is overdraft as per cash book?a) Cheques issued but not presented b) Dividends etc. collected by the bank c) Direct Deposits made into bank etc. d) All of these Correct answer is option 'D'. Can you explain this answer?.
Which of the followings may be deducted when starting point is overdraft as per cash book?a) Cheques issued but not presented b) Dividends etc. collected by the bank c) Direct Deposits made into bank etc. d) All of these Correct answer is option 'D'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Which of the followings may be deducted when starting point is overdraft as per cash book?a) Cheques issued but not presented b) Dividends etc. collected by the bank c) Direct Deposits made into bank etc. d) All of these Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the followings may be deducted when starting point is overdraft as per cash book?a) Cheques issued but not presented b) Dividends etc. collected by the bank c) Direct Deposits made into bank etc. d) All of these Correct answer is option 'D'. Can you explain this answer?.
Solutions for Which of the followings may be deducted when starting point is overdraft as per cash book?a) Cheques issued but not presented b) Dividends etc. collected by the bank c) Direct Deposits made into bank etc. d) All of these Correct answer is option 'D'. Can you explain this answer? in English & in Hindi are available as part of our courses for CA Foundation.
Download more important topics, notes, lectures and mock test series for CA Foundation Exam by signing up for free.
Here you can find the meaning of Which of the followings may be deducted when starting point is overdraft as per cash book?a) Cheques issued but not presented b) Dividends etc. collected by the bank c) Direct Deposits made into bank etc. d) All of these Correct answer is option 'D'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
Which of the followings may be deducted when starting point is overdraft as per cash book?a) Cheques issued but not presented b) Dividends etc. collected by the bank c) Direct Deposits made into bank etc. d) All of these Correct answer is option 'D'. Can you explain this answer?, a detailed solution for Which of the followings may be deducted when starting point is overdraft as per cash book?a) Cheques issued but not presented b) Dividends etc. collected by the bank c) Direct Deposits made into bank etc. d) All of these Correct answer is option 'D'. Can you explain this answer? has been provided alongside types of Which of the followings may be deducted when starting point is overdraft as per cash book?a) Cheques issued but not presented b) Dividends etc. collected by the bank c) Direct Deposits made into bank etc. d) All of these Correct answer is option 'D'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Which of the followings may be deducted when starting point is overdraft as per cash book?a) Cheques issued but not presented b) Dividends etc. collected by the bank c) Direct Deposits made into bank etc. d) All of these Correct answer is option 'D'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
|
|
Explore Courses for CA Foundation exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup