Accounting MCQ Questions and Solutions with Explanations | Commerce

Bank Reconciliation statement is the comparision of a bank statement (sent by bank) with the Cash book. In other words, the balance shown in the Pass Book given by the bank should tally with the balance of Bank Account Kept in his ledger or Cash Book (Bank Column).

A cheque returned by bank marked "NSF" means that There are not sufficient funds in your account. Non-sufficient funds (NSF) is a term used in the banking industry to indicate that a cheque cannot be honored because insufficient funds are available in the account on which the instrument was drawn.

The correct answer is Option A: Accountant of business.
Here's why:
A Bank Reconciliation Statement is a document that reconciles the bank balance with the cash book balance.
The accountant of the business prepares this statement.

Let's break down why the other options are incorrect:
* Option B: Manager of business: While the manager oversees the business, they aren't directly involved in preparing financial statements like the bank reconciliation.
* Option C: Controller of business: The controller usually oversees the accounting department, but the accountant is the one who prepares the reconciliation.
* Option D: Accountant of the bank: The bank's accountant is responsible for the bank's records, not the reconciliation of a business's records with the bank's records. The business is responsible for reconciling their own books with the bank statement.

So, the business's accountant compares the bank statement to the business's cash records and identifies any differences, like outstanding checks or deposits in transit, to prepare the bank reconciliation statement.

Unpresented cheques are also referred to as Outstanding cheques. An unpresented check is a check written by a company and entered in its records, but the check has not yet cleared the company's checking account. In other words, the check has not yet been paid by the bank on which the check is drawn. An unpresented check is also known as an outstanding check.

Outstanding cheques are cheques that are issued by the business but not yet presented to bank for payment.

Accrued expenses are considered as Liability. Accrued expenses are typically periodic, and are documented on a company's balance sheet as current liabilities.

Prepaid expenses are considered as Asset. Prepaid expenses are future expenses that have been paid in advance. You can think of prepaid expenses as costs that have been paid but have not yet been used up or have not yet expired. The amount of prepaid expenses that have not yet expired are reported on a company's balance sheet as an asset.

Earned but not yet received income is treated as Asset. It is income earned during a particular accounting period but not received until the end of that period. It is treated as an asset for the business.

Revenue earned but not yet received by the business is known as Accrued revenue. Accrued income is very important in accounting because companies receive advances for their goods or services all the time. To prevent overstating certain accounts, companies need to differentiate between the revenue that they have earned versus revenue that they have not earned yet.

Correction concept is not regarded as the fundamental concept that is identified by IAS-1.