Bank Reconciliation Statement (Copy)
Topic 3.3: Bank Reconciliation – Quiz
O Level and IGCSE Accounting
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Accounting Full Scale Course
1. What is the purpose of a bank statement?
A. To confirm the company’s credit purchases
B. To check the balance of petty cash
C. To show transactions recorded by the bank
D. To track customer balances
2. What is a bank reconciliation statement used for?
A. To compare sales and purchases
B. To prepare the trial balance
C. To match the cash book with the bank statement
D. To adjust the profit
3. What is the main reason for differences between the bank statement and cash book balances?
A. Credit purchases
B. Errors in invoices
C. Timing differences and bank charges
D. Errors in petty cash book
4. An unpresented cheque is:
A. A cheque not yet recorded in the cash book
B. A cheque received but not recorded in the bank statement
C. A cheque issued but not yet presented for payment
D. A dishonoured cheque
5. An uncredited deposit is:
A. A cheque issued but not presented
B. A payment already cleared by bank
C. A deposit recorded in cash book but not yet in the bank statement
D. A bounced cheque
6. Which item is entered in the cash book but not in the bank statement immediately?
A. Bank interest
B. Unpresented cheque
C. Direct debit
D. Standing order
7. Which of the following may require updating the cash book?
A. Bank errors
B. Outstanding cheques
C. Bank charges and interest
D. Uncredited deposits
8. What is the effect of direct debits on the cash book?
A. Increase the balance
B. No effect
C. Decrease the balance
D. Appear only in the bank statement
9. Standing orders are:
A. Manual payments to suppliers
B. Bank instructions to pay fixed amounts regularly
C. Cash receipts from customers
D. Cheques awaiting clearance
10. What would you do if a dividend was received directly into the bank account?
A. Ignore the entry
B. Update the bank statement only
C. Debit cash book and credit income
D. Credit bank statement and debit supplier
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Accounting Full Scale Course
11. Bank charges found on the bank statement should be:
A. Debited to bank column in cash book
B. Ignored
C. Credited to bank column in cash book
D. Entered in petty cash
12. What is the correct adjustment for interest received appearing in the bank statement only?
A. Credit cash book
B. Debit bank column in cash book
C. Credit interest income, debit cash book
D. Credit cash book, debit drawings
13. Why might the cash book show a different balance than the bank statement?
A. Cash is miscounted
B. Errors in wages account
C. Bank interest, charges, and timing differences
D. Inventory is incorrect
14. Which of these items is likely to appear on the bank statement before the cash book?
A. Bank charges
B. Unpresented cheques
C. Errors in sales journal
D. Uncredited deposits
15. If a cheque was issued and recorded in the cash book but not yet presented, what should be done?
A. Ignore it
B. Add to cash book
C. Deduct from bank statement in reconciliation
D. Add to bank statement
16. Which item would be added to the cash book when updating it?
A. Unpresented cheque
B. Bank interest received
C. Cheques deposited but not yet cleared
D. Outstanding invoices
17. What does the updated cash book balance represent?
A. Bank statement balance
B. Actual bank balance after adjustments
C. Trial balance total
D. Profit earned in the year
18. In a bank reconciliation, which item is subtracted from the bank statement balance?
A. Uncredited deposit
B. Standing order
C. Unpresented cheque
D. Credit transfer
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Accounting Full Scale Course
19. Which of the following is NOT an item to adjust in the cash book?
A. Bank charges
B. Direct debits
C. Unpresented cheques
D. Bank interest
20. Which item will increase the cash book balance when recorded?
A. Bank charges
B. Interest received
C. Direct debit
D. Standing order
21. The final step in preparing a bank reconciliation is:
A. Update petty cash
B. Compare balance sheet
C. Match updated cash book with bank statement
D. Record dividends received
22. Which of the following represents a bank error?
A. Bank records a wrong amount
B. Bank delays cheque clearance
C. Bank does not credit deposit
D. Customer fails to pay
23. A cheque received from a customer was dishonoured. What effect does it have?
A. Increases cash
B. Decreases bank and increases debtor
C. Increases profit
D. Decreases expenses
24. Which two documents are compared in bank reconciliation?
A. Petty cash book and cash book
B. Sales journal and purchases journal
C. Cash book (bank column) and bank statement
D. General journal and ledger
25. What is the purpose of preparing a bank reconciliation regularly?
A. Prevent credit sales
B. Detect and correct errors
C. Pay interest
D. Record depreciation
26. A credit transfer received from a customer will:
A. Increase liability
B. Decrease profit
C. Increase bank balance
D. Decrease capital
27. What is the entry in the cash book for a bank charge?
A. Debit bank
B. Credit bank
C. Debit capital
D. Credit sales
28. A standing order is:
A. A bank error
B. A fixed recurring payment
C. A bounced cheque
D. A delayed payment
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Accounting Full Scale Course
29. If bank interest paid appears in the bank statement but not in the cash book, what is the correction?
A. Credit bank in cash book
B. Debit bank in cash book
C. Debit interest expense, credit bank
D. Debit capital, credit bank
30. Uncredited deposits are:
A. Deposits received but not recorded in the cash book
B. Cheques issued but not yet cleared
C. Deposits made and recorded in cash book but not yet shown in bank statement
D. Cheques returned unpaid
Answer key and explanations
Topic 3.3 – Bank Reconciliation
O Level and IGCSE Accounting
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Accounting Full Scale Course
1. Correct Answer: C
Explanation: A bank statement is issued by the bank and shows all transactions that the bank has recorded for the account.
2. Correct Answer: C
Explanation: Bank reconciliation compares the bank column of the cash book with the bank statement.
3. Correct Answer: C
Explanation: Timing differences, bank charges, and interest usually cause discrepancies between cash book and bank statement.
4. Correct Answer: C
Explanation: An unpresented cheque has been issued and recorded in the cash book but has not yet cleared through the bank.
5. Correct Answer: C
Explanation: An uncredited deposit is a cheque recorded in the cash book but not yet processed by the bank.
6. Correct Answer: B
Explanation: Unpresented cheques are recorded in the cash book when issued but may not appear in the bank statement until later.
7. Correct Answer: C
Explanation: Bank charges and interest may appear only in the bank statement and must be entered in the cash book.
8. Correct Answer: C
Explanation: Direct debits are automatic withdrawals and decrease the cash book balance.
9. Correct Answer: B
Explanation: Standing orders are instructions to pay fixed amounts at regular intervals (e.g., rent, subscriptions).
10. Correct Answer: C
Explanation: Dividends received directly by bank must be recorded in the cash book as:
Debit Bank, Credit Dividend Income
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Accounting Full Scale Course
11. Correct Answer: C
Explanation: Bank charges are entered on the credit side of the cash book (bank column) as they reduce bank balance.
12. Correct Answer: C
Explanation: Interest received increases bank balance → Debit Bank, Credit Interest Income.
13. Correct Answer: C
Explanation: Common causes of differences include timing, bank interest/charges, and direct entries.
14. Correct Answer: A
Explanation: Bank charges are deducted by the bank automatically and appear in the bank statement before the cash book.
15. Correct Answer: C
Explanation: Unpresented cheques are deducted from the bank statement balance during reconciliation.
16. Correct Answer: B
Explanation: Bank interest received is added to the cash book when it first appears in the bank statement.
17. Correct Answer: B
Explanation: The updated cash book reflects actual corrected bank position.
18. Correct Answer: C
Explanation: Unpresented cheques are subtracted from the bank statement to reconcile with the cash book.
19. Correct Answer: C
Explanation: Unpresented cheques are timing differences—not cash book adjustments.
20. Correct Answer: B
Explanation: Interest received is added to the bank balance and increases the cash book.
21. Correct Answer: C
Explanation: After adjusting cash book, we reconcile with bank statement to find final matched balance.
22. Correct Answer: A
Explanation: A bank error is a mistake made by the bank in recording a transaction.
23. Correct Answer: B
Explanation: A dishonoured cheque reduces bank balance and reinstates the debtor.
24. Correct Answer: C
Explanation: A bank reconciliation compares the bank column in the cash book with the bank statement.
25. Correct Answer: B
Explanation: Regular reconciliations help detect omissions, duplications, or bank errors.
26. Correct Answer: C
Explanation: A credit transfer is a receipt into the bank and increases the bank balance.
27. Correct Answer: B
Explanation: Bank charges reduce bank balance → Credit bank in the cash book.
28. Correct Answer: B
Explanation: A standing order is an automated fixed payment (e.g., rent, insurance).
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Accounting Full Scale Course
29. Correct Answer: C
Explanation: Bank interest paid is an expense → Debit Interest Expense, Credit Bank (reduces bank balance).
30. Correct Answer: C
Explanation: Uncredited deposits are recorded in the cash book but have not yet appeared in the bank statement.