If a cheque of Rs 1,000 is issued but recorded in the cash column of the Cash Book instead of the bank column, what is the effect on the bank balance? MCQ with Answer and Explanation

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If a cheque of Rs 1,000 is issued but recorded in the cash column of the Cash Book instead of the bank column, what is the effect on the bank balance?

A. No effect on any balance

B. Bank balance in Cash Book is overstated by Rs 1,000

C. Bank balance in Cash Book is understated by Rs 1,000

D. Cash balance is overstated

Answer: Option B

Solution (By JKExamLibrary)

Since the bank column was not reduced (credited), the bank balance as per the Cash Book remains artificially high (overstated).

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1 Report Error

If total assets increase by Rs 40,000 and total liabilities increase by Rs 10,000, what is the effect on the owner's equity?

A. Increases by Rs 50,000

B. Increases by Rs 30,000

C. Decreases by Rs 30,000

D. Decreases by Rs 40,000

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Correct Answer: Option B

Explanation:
Since Assets = Liabilities + Equity, 40,000 (Increase) = 10,000 (Increase) + Equity (Increase). Equity must increase by Rs 30,000.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #2 Report Error

The 'Gift Tax' in India:

A. Does not exist

B. Is a separate Act

C. Has been abolished and gifts are now taxed under Income Tax Act as income from other sources (above ₹50,000)

D. Is part of GST

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Correct Answer: Option C

Explanation:
Gift tax Act was abolished; gifts are now taxed in the hands of recipient under Section 56(2)(x) of Income Tax Act if exceeding ₹50,000.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping