PRC-1 · Chapter 2 · Question 10 of 100
A cheque for Rs. 45,000 received from a customer was previously entered in the cash book but has now been dishonored by the bank. How is this recorded in the books of prime entry?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) It is entered on the payment side of the cash book.
Explanation
When a cheque is received, it is recorded on the receipt side of the cash book. If it is later dishonored, the entry must be reversed by recording the exact amount on the payment (credit) side of the cash book.
More Books of Prime Entry MCQs
- Q12'Omega Traders' owes Rs. 100,000 to 'Sigma Supplies', and 'Sigma Supplies' simultaneously owes Rs. 60,000 to 'Omega Traders'. They agree…
- Q13A customer pays an invoice of Rs. 200,000 within the discount period and is allowed a 5% settlement discount. What amounts are recorded in…
- Q14At the end of the financial year, 'Vertex Corp' needs to record its annual depreciation expense of Rs. 150,000. Which book of prime entry…
- Q15Which of the following activities best describes the fundamental purpose of 'books of prime entry'?
- Q16'Silverline Merchants' sold goods for physical cash amounting to Rs. 45,000. How is this transaction initially recorded?