True/False
Indicate whether the sentence or statement is true
or false.
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1.
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In
accounting, the term "cash" includes checks, money orders, and funds on deposit in a bank
as well as currency and coins.
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2.
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In a
firm that has a good system of internal control, cash receipts are deposited often.
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3.
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The
entry to replenish petty cash includes a debit to Petty Cash Fund and a credit to Cash.
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4.
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The
endorsement on each canceled check should be examined to make sure that it agrees with the name of
the payee.
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5.
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To
arrive at the accurate balance on a bank reconciliation statement, it is necessary to deduct an NSF
check from the bank statement balance.
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6.
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A
strong system of internal control requires that all payments be made by check except those made from
a carefully controlled cash fund such as a petty cash fund.
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7.
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Usually, there is a difference between the ending balance shown on a firm's bank
statement and the balance shown in the firm's checkbook and Cash account.
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8.
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On a
bank reconciliation statement, deposits in transit are added to the bank statement
balance.
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9.
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On a
bank reconciliation statement, outstanding checks are shown as a deduction from the book
balance.
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10.
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Cash
Short or Over is an expense account when it has a debit balance.
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Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question.
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11.
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The
entry to replenish a petty cash fund includes a. | a debit to Cash and a credit to Petty
Cash. | b. | a debit to Petty Cash Fund and a credit to
Cash. | c. | debits to various expense accounts and a credit to Petty Cash
Fund. | d. | debits to various expense accounts and a credit to
Cash. | | |
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12.
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On a
bank reconciliation statement, you would find all of the following except a. | a list of
canceled checks. | c. | a list of
outstanding checks. | b. | a list of NSF checks. | d. | the bank service charge. | | | | |
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13.
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A
firm's bank reconciliation statement shows a book balance of $12,560, an NSF check of $300, and a
service charge of $10. Its adjusted book balance is a. | $12,870. | c. | $12,270. | b. | $12,250. | d. | $25,550. | | | | |
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14.
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To
arrive at an accurate balance on a bank reconciliation statement, outstanding checks should
be a. | added to the
bank statement balance. | b. | added to the book balance. | c. | deducted from
the bank statement balance. | d. | deducted from the book balance. | | |
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15.
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After
a bank reconciliation statement is completed, a firm may have to make an entry in its accounting
records for a. | outstanding
checks. | c. | the bank
statement balance. | b. | deposits in transit. | d. | NSF checks. | | | | |
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16.
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A
firm appropriately wrote a check for $78 but entered the amount as payment of $87. On a bank
reconciliation statement this error would be shown as a. | a deduction of
$9 from the book balance. | b. | an addition of $9 to the book
balance. | c. | a deduction of $9 from the bank statement
balance. | d. | an addition of $9 to the bank statement
balance. | | |
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17.
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The
entry in a firm's accounting records for a credit customer's check that was returned by the bank
marked "NSF" would include a. | a debit to Miscellaneous Expense and a credit to
Cash. | b. | a debit to Accounts Receivable and a credit to Accounts
Payable. | c. | a debit to Accounts Receivable and a credit to
Cash. | d. | a debit to Cash and a credit to Accounts
Receivable. | | |
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18.
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Which
of the following would not be shown as an adjustment to the book balance on a bank reconciliation
statement? a. | bank service
charges | c. | deposits in
transit | b. | NSF checks | d. | a charge for printing new checks | | | | |
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19.
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In which section of the reconciliation statement above would you find
outstanding checks? a. | Section #1 | c. | Section #3 | e. | None of these | b. | Section
#2 | d. | Section
#4 | | | | | | |
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20.
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In which section of the reconciliation statement above would you find
bank service charges? a. | Section #1 | c. | Section #3 | e. | None of these | b. | Section
#2 | d. | Section
#4 | | | | | | |
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21.
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In which section of the reconciliation statement above would you find
late deposits? a. | Section #1 | c. | Section #3 | e. | None of these | b. | Section
#2 | d. | Section
#4 | | | | | | |
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22.
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In which section of the reconciliation statement above would you find
customer NSF checks? a. | Section #1 | c. | Section #3 | e. | None of these | b. | Section
#2 | d. | Section
#4 | | | | | | |
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23.
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In which section of the reconciliation statement above would you find
canceled checks? a. | Section #1 | c. | Section #3 | e. | None of these | b. | Section
#2 | d. | Section
#4 | | | | | | |
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Matching
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Select the proper name or phrase below that matches the questions.
Note: You may use the same answer more than once. a. | Petty Cash
Fund | e. | Bank Service
Charge | b. | NSF Checks | f. | None of these | c. | Canceled
Checks | g. | Ouststanding
Checks | d. | Deposit in transit | | | | |
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24.
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Checks issued by the depositor that have been paid by the bank and listed on the bank
statement.
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25.
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A
small sum of cash used to make immediate cash payments.
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26.
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A
deposit not recorded on the bank statement because the deposit was made between the time of the
bank's closing date for compiling items for its statement and the time the statement is received by
the depositor.
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27.
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Checks drawn against an account in which there are not sufficient funds, so the check
is returned because of nonpayment.
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28.
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The
process by which the payee transfers ownership of the check to a bank or another party.
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29.
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The
fee charged for handling the checks, collections, and other items for the depositor's
account.
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30.
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Checks that have been written by the depositor and deducted on his or her records but
have not reached the bank for payment.
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