JAIIB Exam 2025 – AFM Important Questions MCQs Quiz-10

07/03/2025

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JAIIB Exam 2025 AFM Important Questions MCQs Quiz-10

JAIIB Exam Quiz 2025: The JAIIB exam is scheduled for 2025 by IIBF. Here, we are providing JAIIB AFM MCQ-based quizzes on a regular basis. You can attempt the quizzes regularly to prepare for the upcoming JAIIB exam. The quizzes will be provided module-wise and unit-wise. You can attempt the JAIIB AFM quizzes from the links below and improve your preparation by practicing regularly. These quizzes will help you boost your score in the JAIIB exam and guide you to clear the exam on your first attempt.

Q.1 Which of the following is NOT a back office function in banking operations?
A) Transaction processing and bookkeeping
B) Customer interaction and relationship management
C) Reconciliation of entries and sub-systems
D) Calculation and posting of interest on deposits

Q.2 What is a key role of the back office in specialised functions like Treasury operations and Forex?
A) Executing trades on behalf of clients
B) Managing customer accounts directly
C) Supporting the trading room by controlling confirmations and settlements
D) Setting monetary policy for financial markets

Q.3 What is a key role of the back office in specialised functions like Treasury operations and Forex?
A) Executing trades on behalf of clients
B) Managing customer accounts directly
C) Supporting the trading room by controlling confirmations and settlements
D) Setting monetary policy for financial markets

Q.4 Why is periodic reconciliation with third-party ATM vendors necessary for banks?
A) To ensure accurate ATM cash balances and proper fund settlements
B) To reduce the number of ATMs in operation
C) To allow third-party vendors to independently manage ATM funds
D) To discourage the use of ATMs for cash withdrawals

Q.5 What is the primary purpose of reconciling Nostro accounts with correspondent banks?
A) To track domestic cash transactions within the bank’s branches
B) To verify foreign exchange transactions by matching internal and external records
C) To determine the profitability of foreign exchange trading
D) To convert foreign currency holdings into local currency automatically

Q.6 Why is it necessary for banks to reconcile their balances with the Reserve Bank of India (RBI)?
A) To determine the profitability of CRR and Repo transactions
B) To ensure accuracy between the bank’s ledger and RBI account statements
C) To increase the number of branches holding RBI accounts
D) To facilitate the automatic clearance of outstanding balances

Q.7 Which of the following is a key consideration when reconciling balances with banks other than the RBI?
A) Ensuring that all customer loan accounts are closed before reconciliation
B) Verifying that no cheque sent or received in clearing remains outstanding
C) Adjusting investment balances exclusively on an annual basis
D) Automatically reversing all debit charges to avoid discrepancies

Q.8 What is a major risk associated with neglecting the reconciliation of suspense accounts?
A) Delay in customer loan approvals
B) Difficulty in tracking customer deposits
C) Increased vulnerability to fraud through unauthorized debit entries
D) Reduction in overall bank profitability

Q.9 Why has computerisation not completely eliminated reconciliation challenges at the branch level?
A) Errors in manual ledger posting still exist
B) Suspense and Sundry Deposit accounts require manual intervention for reconciliation
C) General ledger control accounts cannot be automated
D) Balancing books of accounts is no longer necessary

Q.10 . Which of the following transactions does NOT typically result in an inter-office debit or credit entry?
a) Issuance of drafts on other branches
b) Payment of instruments like gift cheques on behalf of other branches
c) Internal fund transfer between accounts within the same branch
d) Deposits and withdrawals from the currency chest maintained by another branch

Q.11 In the reconciliation of inter-office transactions, how does an unmatched/unreconciled inter-office adjustment balance appear in the balance sheet of the bank as a whole?
a) As a contingent liability under “Off-Balance Sheet Items”
b) As an “Inter Office Adjustments Balance” under assets or liabilities
c) As part of the bank’s “Reserves & Surplus”
d) As a memorandum entry without affecting financial statements

Q.12 What is the primary risk associated with unreconciled inter-office transactions?
a) Delayed interest payments on inter-branch transactions
b) Potential errors or fraudulent activities
c) Reduction in customer confidence in the bank
d) Increase in non-performing assets (NPAs)

Q.13 Why might there be a time lag in reconciling certain inter-office transactions?
a) Due to variations in foreign exchange rates affecting the transaction
b) Because of system downtimes in core banking software
c) Some transactions, like drafts issued, take time to be settled at the other branch
d) Differences in accounting practices followed by different branches

Q.14 Branch X issues a draft for ₹8,500 on Branch Y of the bank. The account of the customer is debited for ₹8,500, and the Inter-Office Account is credited by ₹8,500. After 3 days, Branch Y pays the draft by crediting the payee’s account and debiting the Inter-Office Account by ₹8,500. The Central Reconciliation Department (CRD) successfully matches the originating and responding entries. However, assume Branch X never actually issued the draft, and the draft paid by Branch Y was fraudulent. What would be the impact on the reconciliation process?
a) The CRD will not detect the fraud since the total inter-office transactions remain balanced.
b) The fraudulent transaction will appear as an unreconciled entry in the statement prepared by the CRD.
c) The transaction will be automatically reversed by the system as it does not match any originating entry.
d) The fraud will remain undetected unless manually verified by the payee.

Q.15 Which of the following statements best describes the reconciliation process for pointing accounts compared to non-pointing accounts?
a) Reconciliation in pointing accounts is more challenging as it requires manual tracking of each transaction.
b) Non-pointing accounts are automatically reconciled by the system without any manual intervention.
c) Pointing accounts facilitate easier reconciliation by using a mandatory reference number, while non-pointing accounts require manual tracking.
d) Non-pointing accounts eliminate reconciliation errors completely due to the absence of reference numbers.

Q.16 According to RBI guidelines, which of the following is NOT considered an objectionable practice in handling inter-office accounts?
a) Using office accounts to disguise cash transactions and bypass reporting of suspicious transactions
b) Mandatory keying in of reference numbers for pointing accounts to ensure reconciliation
c) Routing customer transactions through office accounts instead of proper savings or current accounts
d) Creating dummy debits to office accounts to prevent borrower accounts from becoming NPAs

Q.17 As per RBI guidelines, how should banks handle credit entries in inter-branch accounts that have been outstanding for more than five years?
a) They should be written off directly as a loss in the profit and loss account.
b) They should be transferred to a Blocked Account under “Other liabilities and provisions – Others” in the balance sheet.
c) They should be set off against outstanding debit balances in interbranch accounts.
d) They should be reclassified as income and added to the bank’s reserves.

Q.18. According to RBI guidelines, within what time frame must banks reconcile outstanding entries in their inter-branch accounts?
a) 3 months
b) 5 months
c) 6 months
d) No specific time frame is mandated