Daily JAIIB Quiz 28 Oct 2026

Financial accounting systematically records business transactions and summarises them in financial statements so users can assess financial position, performance and cash flows. Users include owners, lenders, investors, regulators and other stakeholders. Management accounting, by contrast, is more specifically designed to support internal planning, control and decision-making. Financial accounting must follow the applicable reporting framework and relevant legal requirements.

The going concern assumption presumes that an entity will continue its operations for the foreseeable future and does not intend or need to liquidate or materially curtail operations. This assumption affects asset and liability measurement—for example, assets are generally not measured as if they must be sold immediately in a forced liquidation. If going-concern uncertainty is material, the applicable reporting framework requires appropriate assessment and disclosure.

The double-entry system records each transaction with equal total debits and credits. This preserves the accounting equation—Assets = Liabilities + Equity—provided the entries are correctly recorded. A transaction can affect two or more accounts, but the total debit amount must equal the total credit amount. Equal debits and credits do not, by themselves, guarantee that every transaction has been classified correctly or that no errors exist.

Furniture is an asset, and purchasing it increases the furniture account. Cash is also an asset, and paying cash decreases the cash account. Under the traditional rules, the asset received is debited and the asset given up is credited. The entry is Furniture Account Dr. and To Cash Account. The purchase is normally capital expenditure because it acquires a resource used over more than one accounting period, subject to the entity‘s applicable capitalisation policy.

A petty cash book records small, frequent payments such as postage, stationery, and local conveyance. Under the imprest system, the petty cashier receives a fixed float for a period. At the end of the period, the cashier is reimbursed for the amount spent, restoring the float to its original level, subject to proper vouchers and authorisation. This helps maintain control over small cash expenses.

A cheque issued and recorded in the cash book reduces the cash-book bank balance immediately, but the bank may not reduce the account until the cheque is presented and paid. Therefore, when reconciling from the cash-book balance to the bank-statement balance, an unpresented cheque is generally added to the cash-book balance. The sign reverses if the reconciliation starts from the bank-statement balance. Always identify the starting balance before applying additions and deductions.

Bank charges recorded by the bank reduce the balance shown in the bank statement but may be absent from the business‘s cash book. The business should update the cash book by debiting bank charges expense and crediting the bank account. A revised cash-book balance can then be used to prepare the reconciliation statement for remaining timing differences and errors. Adjusting the cash book improves the completeness of the accounting records.

An error of complete omission occurs when a transaction is not recorded in either the debit or credit account. Since neither side is posted, the debit and credit totals remain equal, although the accounts are incomplete. Other errors that may not affect agreement include errors of principle and compensating errors. A trial balance checks arithmetic equality of ledger balances; it does not prove that all transactions have been recorded correctly.

Under the straight-line method, annual depreciation is (Cost − Residual Value) ÷ Useful Life. Therefore, (₹1,20,000 − ₹20,000) ÷ 5 = ₹20,000 per year. This assumes the stated useful life and residual value remain appropriate and that the asset is available for use for a full year. Applicable accounting standards require depreciation to reflect the pattern in which the asset‘s future economic benefits are expected to be consumed.

Under the written-down value (diminishing balance) method, depreciation is calculated by applying a fixed percentage to the asset‘s opening carrying amount or written-down value for the period. Consequently, depreciation expense generally declines over the asset‘s life as the carrying amount decreases, assuming the rate and asset base remain unchanged. The method is suitable where the pattern of economic benefits consumed is greater in earlier periods, subject to the applicable accounting framework.

Capital expenditure generally creates or acquires an asset, or enhances an existing asset‘s capacity, useful life, or future economic benefits beyond ordinary maintenance. Buying a new delivery vehicle is therefore normally capital expenditure and is recognised as an asset, with depreciation charged over its useful life. Routine servicing and repairs that merely maintain an asset‘s existing operating condition are normally revenue expenditure. The final treatment depends on the facts and applicable accounting policy.

A bill of exchange is a written instrument containing an unconditional order, signed by the drawer, directing a specified person to pay a certain sum to a specified person or to that person‘s order, or to bearer as permitted by law. The drawer makes the order, the drawee is the person directed to pay, and the payee is the person to whom payment is to be made. Once the drawee accepts the bill, the drawee becomes the acceptor and is primarily liable to pay at maturity.

A bill is dishonoured by non-payment when the acceptor fails to pay it at maturity. The holder may take the steps permitted by law and the terms of the instrument to recover the amount from parties liable on the bill. In accounting, the bill receivable is generally brought back into the debtor‘s account, together with any properly recoverable noting charges where applicable. Dishonour is distinct from merely discounting or endorsing a bill.

For a bank, cash received increases its cash asset, while the amount credited to the customer‘s deposit account increases the bank‘s liability to that customer. A simplified entry is Cash/Branch Cash Account Dr. and Customer Deposit Account Cr. The customer‘s deposit is a liability of the bank, not the bank‘s income. The exact ledger names and system postings depend on the bank‘s chart of accounts and core banking configuration.

A suspense account may be used temporarily when the correct account or classification for an item is uncertain, or when a difference prevents a trial balance from agreeing and the cause has not yet been identified. It is not a permanent solution. The underlying error or unmatched item should be investigated, documented, corrected, and cleared promptly. In banking, long-outstanding suspense or inter-office entries can signal operational, reconciliation, or control weaknesses.

Inter-branch reconciliation checks that transactions between branches or offices are recorded consistently and that corresponding debit and credit entries match. It helps identify unmatched, duplicate, incorrectly posted, or long-outstanding items so they can be investigated and cleared. Timely reconciliation supports accurate financial reporting, fraud prevention, operational control, and reliable customer service. Unreconciled entries should be aged, assigned for follow-up, and escalated according to internal procedures.

Concurrent audit is an ongoing or near-real-time examination of selected banking transactions and processes, designed to identify irregularities and control weaknesses promptly. Its scope and coverage depend on applicable regulatory guidance and the bank‘s approved audit framework. It complements, rather than replaces, statutory audit and other internal assurance functions. Findings should be reported through the prescribed channels and followed up for timely corrective action.

A statutory audit is an audit required by law and conducted by an auditor appointed in accordance with the applicable legal and regulatory framework. For a bank, it provides an independent opinion on the financial statements and involves work prescribed by applicable law, auditing standards, and regulatory directions. It is distinct from concurrent audit, internal audit, and inspection, each of which has its own purpose and scope. An audit provides reasonable assurance, not an absolute guarantee that every error or fraud will be detected.

The matching principle links expenses with the revenues they help generate, where such matching is appropriate under the applicable reporting framework. Under accrual accounting, transactions are recognised when the relevant economic events occur, rather than only when cash is received or paid. Modern accounting standards also impose specific recognition criteria and do not permit arbitrary deferral of expenses merely to smooth profits. The principle should therefore be applied consistently with the relevant accounting standard.

Indian Accounting Standards (Ind AS) are accounting standards prescribed in India under the applicable legal framework and are substantially converged with International Financial Reporting Standards (IFRS), with Indian-specific modifications where applicable. They are not simply identical to IFRS in every respect. Whether an entity must apply Ind AS depends on the relevant statutory applicability requirements and notifications. Candidates should distinguish Ind AS from older Indian Accounting Standards (AS) that continue to apply to entities within their scope.