The balance of the Cash Book is: MCQ with Answer and Explanation

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The balance of the Cash Book is:

A. Nil

B. Either debit or credit

C. Always a credit balance

D. Always a debit balance

Answer: Option D

Solution (By JKSSB Mock Tests)

Cash Book is a book of original entry and a ledger account. Its balance represents cash in hand, which is always a debit balance (asset).

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

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Question #1

Which of the following is NOT a limitation of financial accounting?

A. Provides data for tax assessment

B. Ignores price level changes

C. Subject to estimation and judgment

D. Ignores qualitative aspects

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Correct Answer: Option A

Explanation:
Providing data for tax assessment is a utility of financial accounting, not a limitation. The others are recognized limitations.

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Question #2

A trial balance shows the following: Debtors ₹50,000; Provision for doubtful debts ₹5,000. It is decided to maintain provision at 10% of debtors. The amount to be charged to Profit & Loss Account will be:

A. ₹10,000

B. ₹2,500

C. ₹5,000

D. Nil

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Correct Answer: Option D

Explanation:
Required provision = 10% of 50,000 = 5,000. Existing provision is also ₹5,000. So no additional charge needed. Thus, nil.

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Question #3

S1: Revaluation Account is a real account. S2: Revaluation Account is prepared to show the effect of revaluation on partners' capital. Which statement(s) is/are correct?

A. S1 only

B. Neither S1 nor S2

C. Both S1 and S2

D. S2 only

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Correct Answer: Option D

Explanation:
Revaluation Account is a nominal account, not a real account, as it records expenses and incomes related to revaluation. Its purpose is indeed to show the net effect on partners' capital. S1 is incorrect, S2 is correct.

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