This should be correct, as X가 있다 can mean both that X exists and that someone has X
No, that's hard to translate well, but it's not "Is that banana cake?" (If it makes sense in Korean, it's probably, "Is there that banana cake?" or "Does that banana cake exist?" or, depending on context, "Do you have that banana cake?")
You're looking for something like 그것이 바나나 케이크입니까?