Cash Book – Page 5 – NBC Institute

FA – Nov 2012 – L1 – SB – Q4 – Financial Statements Preparation

Prepare a bank cash book, retained earnings, and statement of financial position for Fehintola Enterprises.

Question

On 1 January 2011, Mrs. Fehintola decided to invest her retirement benefit of N1,000,000 in the wholesale business of Fehintola Enterprises. She lodged the amount into the business bank account and paid for the following by cheque:

Motor Van: N600,000
Warehouse fittings: N340,000
Rent: N12,500

Proper accounting records were not kept, but the financial position as at 31 December 2011 revealed the following:

Inventories of goods in the warehouse: N150,000
Trade receivables: N125,000
Cash at Bank: N751,750
Trade payables for supplies: N100,000
Accrued rent: N15,000

The following were paid for by cheque:

Electricity bill at N2,500 per quarter up to 31 March 2012
Suppliers: N1,500,000
Personal expenses: N150,000

On 31 December 2011, it was agreed that the Motor Van and Warehouse fittings should be valued at N560,000 and N320,000, respectively.

Required:

a. Prepare the Bank Cash Book (5 Marks)
b. Prepare a statement showing the retained earnings for the year ended 31 December 2011 (5 Marks)
c. Prepare the Statement of Financial Position as at 31 December 2011 (5 Marks)

Answer

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Tags: Bank Accounts, Cash Book, Financial Statements, Retained Earnings
Level: Level 1

Topic: Financial Statements Preparation
Series: NOV 2012

FA – Nov 2012 – L1 – SA – Q8 – Bank Reconciliation

Identifying the cause of discrepancy between the cash book and the bank statement.

Question

Which of the following does NOT cause a discrepancy between cash book and bank statement balances?

A. Direct credit found in the bank statement
B. Credit sales posted to the debit side of the cash book (bank column)
C. COT and other finance costs credited in the bank statement
D. The company’s credit balance in the bank statement
E. Subscription paid by the bank on behalf of the company’s manager and debited in the bank statement

Answer

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Tags: Bank Statement, Cash Book, Discrepancy, Reconciliation
Level: Level 1

Topic: Bank reconciliations
Series: NOV 2012

FA – Nov 2015 – L1 – SB – Q2 – Bank Reconciliation

Preparing an adjusted cash book and bank reconciliation for a club with discrepancies.

Question

a. Bank Statement is a mirror of any entity’s cash book, and they are expected to have equal balances at any point in time. However, this is not usually the case. Based on the ongoing statement, state five reasons that could cause the bank statement balance to differ from the cash book balance. (5 Marks)

b. The Treasurer of Young Star Social Club (YSSC) did not keep proper records for receipts and payments for the month of December 2014, causing mistrust among members. He has decided to seek your assistance to prepare a bank reconciliation statement before presenting the account to the club members.

The bank statement and the receipts and payments cash book of the club on December 31, 2014, showed a credit balance of N205,000 and N2,078,000, respectively. A comparison of the bank statement with the receipts and payment cash book of the club revealed the following:

i. Cheque drawn but not presented N3,160,000
ii. Amount lodged in the bank but not credited N725,000
iii. Entries in bank statement not recorded in receipts and payments cash book:

Standing order for loan refund N35,000
Interest received on deposit account N18,000
Bank charges N15,000
Cheque paid-in but returned with “refer to drawer” N120,000

Required:
i. Prepare an adjusted cash book as at December 31, 2014; (8 Marks)
ii. Prepare the Bank Reconciliation Statement showing the balance on December 31, 2014. (7 Marks)

(Total 20 Marks)

Answer

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Tags: Adjustments, Bank Statement, Cash Book, Reconciliation
Level: Level 1

Topic: Bank reconciliations
Series: NOV 2015

FA – Nov 2015 – L1 – SA – Q16 – Recording Financial Transactions (Including Source Documents, Books of Prime Entry, and Cash Books)

This question identifies the items that should be included in an adjusted cash book.

Question

Which of the following should be included in the adjusted cash book?
A. Cheque issued, presented and cashed
B. Opening bank balance
C. Bank charges and commission
D. Bank deposit
E. Cash payment made by the firm

Answer

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Tags: Accounting principles, Bank Adjustments, Cash Book
Level: Level 1

FA – Nov 2015 – L1 – SA – Q12 – Recording Financial Transactions

This question identifies which document is not used to update a Cash Book.

Question

Which of the following is NOT a source document used to update a Cash Book?
A. Cheque stub
B. Payment voucher
C. Receipts
D. Paying-in-slip
E. Debit note

Answer

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Tags: Accounting principles, Cash Book, Source Documents
Level: Level 1

FA – May 2018 – L1 – SB – Q1 – Recording Financial Transactions

Prepares a three-column cash book, ledger accounts, and a trial balance for a sole trader.

Question

On January 1, 2016, Mr. Wale commenced business as a sole trader with N10,000,000, which he paid into the business bank account. He purchased a van for N6,000,000 from Mallam Tanko and paid half of the amount due by cheque on January 2, 2016. The following transactions took place in the month of January 2016:

Jan 2: Paid rent of N500,000 for two years in advance for the business premises by cheque.
Jan 3: Purchased goods worth N2,000,000 from Granules Limited and paid half of the amount by cheque so as to enjoy a cash discount of 4%.
Jan 4: Purchased furniture for N200,000 and computers for N250,000 by cheque.
Jan 6: Conducted sales promotion for one month, offering cash and trade discounts as follows:
- 5% discount on cash sales
- 10% trade discount for sales above N500,000
Jan 8: Sold goods for cash to Sanders Limited for N340,000.
Jan 10: Sold goods to Miles and Stone Limited for N1,000,000, who paid 75% by cheque.
Jan 12: Mr. Bobby purchased goods valued at N100,000 and paid in full by cash.
Jan 13: Deposited N300,000 cash in the bank.
Jan 15: Paid salaries by cheque (N80,000) and electricity bill by cheque (N10,000).
Jan 20: Paid the sum of N1,750,000 to Mallam Tanko for the van by cash.
Jan 27: Mr. Wale withdrew N10,000 for personal expenses.
Jan 30: Cash sales of N40,000 were made.

Required:
a. Prepare a three-column cash book. (6 Marks)
b. Prepare the ledger accounts for the transactions. (8 Marks)
c. Prepare a trial balance as at January 31, 2016. (6 Marks)

Answer

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Tags: Cash Book, Ledger Accounts, Trial Balance
Level: Level 1

FA – Nov 2021 – L1 – SA – Q15 – Bank Reconciliation

This question focuses on which bank reconciliation items should not be adjusted in the cash book.

Question

Which of the following bank reconciliation items should NOT be added or subtracted from the cash book balance to determine the adjusted bank balance?
A. Bank service charges
B. Unpresented cheques
C. Direct transfer
D. Cash book error
E. Value added tax charges

Answer

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Tags: Bank Reconciliation, Cash Book, Multiple Choice
Level: Level 1

Topic: Bank reconciliations
Series: NOV 2021

FA – Nov 2021 – L1 – SA – Q13 – Accounting Concepts

This question requires calculating the amount of cash paid out during a period.

Question

In a cash book, the opening balance was N70,600, closing balance was N86,600 and the total cash received during the period was N180,000. What was the amount of cash paid out during the period?
A. N89,000
B. N98,000
C. N146,000
D. N164,000
E. N186,000

Answer

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Tags: Cash Book, Cash Flow, Multiple Choice, Payments
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2021

FA – Nov 2021 – L1 – SA – Q11 – Trial Balance

This question evaluates the treatment of discounts in the cash book and their impact on the trial balance.

Question

If the total discount allowed in a cash book was N52,000 and the total discount received was N66,700, which of the following is TRUE concerning the two discounts?
A. They should not appear in the trial balance as they were already either received or paid out
B. They must be balanced in the cash book and the difference taken to the receivables
C. They must not appear in the general ledger
D. They must be balanced in the cash book and the difference taken to the trial balance
E. They should not be balanced in the cash book before being taken to the trial balance

Answer

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Tags: Cash Book, Discounts, Multiple Choice, Trial Balance
Level: Level 1

Topic: Trial Balance: Usefulness and Limitations
Series: NOV 2021

FA – Nov 2021 – L1 – SA – Q4 – Accounting Concepts

This question relates to the ledger entry for a vehicle purchased on cash.

Question

Success Motors bought three Toyota Jeeps on cash at the cost of N16,000,000. On debiting the vehicle account, the corresponding credit for the purchase will appear in the:
A. Sales day book
B. Purchase day book
C. Payable account
D. Cash book
E. Purchases account

Answer

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Tags: Business Transactions, Cash Book, Multiple Choice, Vehicle Purchase

Topic: Accounting Concepts
Series: NOV 2022

FA – May 2017 – L1 – Q3 – Bank reconciliations | Preparation of financial statements of a sole trader

Preparation of adjusted cash book, bank reconciliation, and corrected net profit statement for Unity Trading Enterprise.

Question

The Income Statement of Unity Trading Enterprise (UTE) for the year ended 31 December 2016 as prepared by an Accounts Assistant indicated a net profit of GH¢49,360,000. However, the cash book on 31 December 2016 showed a balance at bank to be GH¢6,440,000. Your attention is however drawn to the following:

i) Cheques from customers totaling GH¢4,980,000 which were recorded in the cash book on 20 December 2016 were actually not credited by the bank until 2 January 2017.

ii) Cheques issued on 13 December 2016 totaling GH¢7,420,000 in favour of suppliers were actually not paid by the bank until after the end of the year (that is after 31 December 2016).

iii) On 22 November 2016, the bank paid an amount of GH¢3,600,000 with respect to a standing order from UTE for rent of business premises for the three months to 31 January 2017 but unfortunately, no entry for this payment had been made in the cash book. Additionally, no provision of this outstanding rent had been made in the income statement for the period.

iv) On 31 December 2016, a customer known as Mr. Abuusu had paid GH¢2,340,000 into UTE bank account through a standing order to his bankers in full settlement of a debit balance of GH¢2,400,000 in UTE sale ledger, but no entry had been made in the books.

v) On 30 December 2016, a cheque for GH¢480,000 was received from a customer in settlement of sales invoice for the same amount. The cheques were lodged into UTE bank account. Both sale of goods and the cheque were entered in UTE’s books. However, on 31 December 2016, the customer returned the goods and also instructed her bankers not to pay the cheque (This instruction was carried out the same day) but no entries in respect of these latter developments have been made in UTE’s books. The cost of these goods amounting to GH¢320,000 were not actually included in the closing inventories.

vi) A cheque for GH¢840,000 from an insurance company in settlement of claim for fire damage to inventory had been paid into the bank and credited by the bank on 21 December 2016, but an estimated amount of GH¢800,000 had been entered in UTE’s income statement.

Required:
a) Prepare a statement on 31 December 2016, indicating clearly the cash book balance. (5 marks)

b) Prepare the bank reconciliation statement for UTE. (5 marks)

c) Prepare a statement of corrected net profit of UTE on 31 December 2016. (5 marks)

d) Explain TWO reasons for carrying out bank reconciliation. (2 marks)

e) Explain why the bank statement is usually taken as being more accurate than the details that appear in the company’s own records. (2 marks)

f) Indicate how the bank balance will be reported in UTE’s final accounts. (1 mark)

Answer

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Tags: Bank Reconciliation, Cash Book, Financial Statements
Level: Level 1

Topic: Bank reconciliations, Preparation of financial statements of a sole trader
Series: MAY 2017

FA – May 2016 – L1 – Q3 – Bank reconciliations

Prepare an adjusted cash book, a bank reconciliation statement, and discuss the benefits of reconciling cash book and bank statement balances.

Question

The following is a summary from the cash book of BW Ltd for July 2015:

Description	GH¢
Opening balance	1,530
Receipts	23,104
Payments	(23,005)
Closing balance	1,629

On investigation, it was discovered that:
i) Bank charges of GH¢15 shown on the bank statement have not been entered in the cash book.
ii) A cheque drawn for GH¢110 to pay a supplier has been entered in the cash book as a receipt.
iii) A cheque from a customer for GH¢120, which was banked (and included above in receipts), has been returned by the bank, but this has not been adjusted in the company’s books.
iv) An error of transposition which occurred in the opening balance of the cash book should have been recorded as GH¢1,350.
v) Cheques totaling GH¢264 have been sent by post to suppliers but were not presented to the company’s bank until August 2015.
vi) The last page of a bank account paying-in book shows a deposit of GH¢1,040 which was not credited to the account by the bank until 1st August 2015.
vii) The company’s bank statement at 31st July 2015 shows a balance of GH¢318.

Required:
a) Demonstrate any adjustments needed to the company’s accounting records. (8 marks)
b) Prepare a Bank Reconciliation Statement as at 31st July 2015. (6 marks)
c) Explain THREE benefits to BW Ltd of reconciling its cash book and bank statement balances. (6 marks)

Answer

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Tags: Accounting Errors, Adjustments, Bank Reconciliation Statement, Cash Book
Level: Level 1

Topic: Bank reconciliations
Series: MAY 2016

Question Tag: Cash Book

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FA – Nov 2012 – L1 – SB – Q4 – Financial Statements Preparation

Prepare a bank cash book, retained earnings, and statement of financial position for Fehintola Enterprises.

FA – Nov 2012 – L1 – SA – Q8 – Bank Reconciliation

Identifying the cause of discrepancy between the cash book and the bank statement.

FA – Nov 2015 – L1 – SB – Q2 – Bank Reconciliation

Preparing an adjusted cash book and bank reconciliation for a club with discrepancies.

FA – Nov 2015 – L1 – SA – Q16 – Recording Financial Transactions (Including Source Documents, Books of Prime Entry, and Cash Books)

This question identifies the items that should be included in an adjusted cash book.

FA – Nov 2015 – L1 – SA – Q12 – Recording Financial Transactions

This question identifies which document is not used to update a Cash Book.

FA – May 2018 – L1 – SB – Q1 – Recording Financial Transactions

Prepares a three-column cash book, ledger accounts, and a trial balance for a sole trader.

FA – Nov 2021 – L1 – SA – Q15 – Bank Reconciliation

This question focuses on which bank reconciliation items should not be adjusted in the cash book.

FA – Nov 2021 – L1 – SA – Q13 – Accounting Concepts

This question requires calculating the amount of cash paid out during a period.

FA – Nov 2021 – L1 – SA – Q11 – Trial Balance

This question evaluates the treatment of discounts in the cash book and their impact on the trial balance.

FA – Nov 2021 – L1 – SA – Q4 – Accounting Concepts

This question relates to the ledger entry for a vehicle purchased on cash.

FA – May 2017 – L1 – Q3 – Bank reconciliations | Preparation of financial statements of a sole trader

Preparation of adjusted cash book, bank reconciliation, and corrected net profit statement for Unity Trading Enterprise.

FA – May 2016 – L1 – Q3 – Bank reconciliations

Prepare an adjusted cash book, a bank reconciliation statement, and discuss the benefits of reconciling cash book and bank statement balances.

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FA – Nov 2012 – L1 – SB – Q4 – Financial Statements Preparation

Prepare a bank cash book, retained earnings, and statement of financial position for Fehintola Enterprises.

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FA – Nov 2012 – L1 – SA – Q8 – Bank Reconciliation

Identifying the cause of discrepancy between the cash book and the bank statement.

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FA – Nov 2015 – L1 – SB – Q2 – Bank Reconciliation

Preparing an adjusted cash book and bank reconciliation for a club with discrepancies.

You're reporting an error for "FA – Nov 2015 – L1 – SB – Q2 – Bank Reconciliation"

FA – Nov 2015 – L1 – SA – Q16 – Recording Financial Transactions (Including Source Documents, Books of Prime Entry, and Cash Books)

This question identifies the items that should be included in an adjusted cash book.

You're reporting an error for "FA – Nov 2015 – L1 – SA – Q16 – Recording Financial Transactions (Including Source Documents, Books of Prime Entry, and Cash Books)"

FA – Nov 2015 – L1 – SA – Q12 – Recording Financial Transactions

This question identifies which document is not used to update a Cash Book.

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FA – May 2018 – L1 – SB – Q1 – Recording Financial Transactions

Prepares a three-column cash book, ledger accounts, and a trial balance for a sole trader.

You're reporting an error for "FA – May 2018 – L1 – SB – Q1 – Recording Financial Transactions"

FA – Nov 2021 – L1 – SA – Q15 – Bank Reconciliation

This question focuses on which bank reconciliation items should not be adjusted in the cash book.

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FA – Nov 2021 – L1 – SA – Q13 – Accounting Concepts

This question requires calculating the amount of cash paid out during a period.

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FA – Nov 2021 – L1 – SA – Q11 – Trial Balance

This question evaluates the treatment of discounts in the cash book and their impact on the trial balance.

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FA – Nov 2021 – L1 – SA – Q4 – Accounting Concepts

This question relates to the ledger entry for a vehicle purchased on cash.

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FA – May 2017 – L1 – Q3 – Bank reconciliations | Preparation of financial statements of a sole trader

Preparation of adjusted cash book, bank reconciliation, and corrected net profit statement for Unity Trading Enterprise.

You're reporting an error for "FA – May 2017 – L1 – Q3 – Bank reconciliations | Preparation of financial statements of a sole trader"

FA – May 2016 – L1 – Q3 – Bank reconciliations

Prepare an adjusted cash book, a bank reconciliation statement, and discuss the benefits of reconciling cash book and bank statement balances.

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