Chapter 8 Acct

Situations in which you Add to Bank Statement

In-Transit Deposits

Situations in which you Deduct from Cash Account Balance

Cleared Check not yet recorded in Cash Account Bank Service Charges Debit Memo in Bank Statement Written Check cleared for $550 but recorded in cash account for $500 Insufficient Funds Check by one of your customers returned by the bank

Situations in which you Deduct from the Bank Statement

Credit Memo issued for another company’s cash collected included in your bank statement Outstanding Checks

Situations in which you Add to Cash Account Balance

Deposit recorded on the bank statement but not on the company’s books Credit Memo included in bank statement for collection of your Note Receivable

Which one of the following below is not an element of internal control?

Behavior analysis

Which one of the following below reflects a weak internal control system?

a single employee is responsible for collecting and recording cash

The objectives of internal control are to

Provide reasonable assurance that operations are managed to achieve goals, financial reports are accurate, and laws and regulations are complied with

Internal control does not consist of policies and procedures that

guarantee the company will not go bankrupt

When a firm uses internal auditors, it is adhering to which one of the following internal control elements?

Monitoring

Which one of the following below is not a factor that influences a business’s control environment?

proofs and security measurers

In management’s internal control report that is now required of all public companies, which of the following does not have a direct effect on a company’s internal control system

Board of trustees

An element of internal control is

risk assessment

A firm’s internal control environment is not influenced by

monitoring policies

A necessary element of internal control

information and communication

Which of the following should not be considered cash by an accountant?

postage stamps

An example of a preventive control is

seperation of the purchasing department and accounting department personnel

The cash account in the depositor’s ledger is an

asset with a debit balance

A special form on which is recorded pertinent data about a liability and the particulars of its payment is called a

voucher

The notification accompanying a check that indicates the specific invoice being paid is called a

remittance advice

Procedures designed to protect cash from theft and misuse from the time it is received until it can be deposited in a bank are called

preventive controls

The debit balance in Cash Short and Over at the end of an accounting period is reported as

an expense on the income statment

A voucher

is normally prepared in the Accounting Department

The reconciliation of the cash register tape with the cash in the register is an example of

independent internal verification

A voucher is usually supported by

all of the above) a supplier’s invoice, a purchase order, and a receiving report

Which of the following is not an internal control activity for cash?

The functions of record keeping and maintaining custody of cash should be combined

Under the voucher system, every transaction is recorded at the time of

incurring

The term cash includes

a and b) coins, currency, checks, money orders, and money on deposit that is available for unrestricted withdrawal

EFT

Can process certain cash transactions at less cost than by using the mail

There are three parties to a check. the drawer is

the one who signs the check ordering payment by the bank

On the bank’s accounting records, customers’ accounts are normally shown as

a liability

Which one of the following would not cause a bank to debit a depositor’s account?

Collection of a note receivable

Credit memorandums from the bank

show the bank has collected a note receivable for the customer

A bank statement

shows the activity that increased or decreased the depositor’s account balance

A debit or credit memorandum describing entries in the depositor’s bank account may be enclosed with the bank statement. An example of a credit memorandum is

a promissory note left for collection

A check drawn by a depositor for $180 in payment of a liability was recorded in the journal as $810. What entry is required in the depositor’s accounts?

debit Cash; credit Accounts Payable

A check drawn by a depositor for $180 in payment of a liability was recorded in the journal as $810. This item would be included on the bank reconciliation as an

addition to the balance per the depositor’s records

A person authorized to write checks drawn on a checking account at a bank must sign and have on file with the bank a

signature card

Following the completion of the bank reconciliation, an adjusting entry was made that debited cash and credited interest revenue. Therefore the bank reconciliation must have included an item that was

added to the balance per depositor’s records

A check drawn by a depositor in payment of a voucher for $725 was recorded in the journal as $257. This item would be included in the bank reconciliation as a

deduction from the balance per the depositor’s records

Journal entries based on the bank reconciliation are required in the depositor’s accounts for

book errors

The bank reconciliation

is part of the internal control system

A bank reconciliation should be prepared periodically because

any differences between the depositor’s records and the bank’s records should be determined, and any errors made by either party should be discovered and corrected

Accompanying the bank statement was a debit memorandum for bank service charges. On the bank reconciliation, the item is

a deduction from the balance per depositor’s records

Accompanying the bank statement was a debit memorandum for bank service charges. What entry is required in the depositor’s accounts?

debit Miscellaneous Administrative Expense; credit cash

Accompanying the bank statement was a debit memorandum for an NSF check received from a customer. This item would be included on the bank reconciliation as a

deduction from the balance per depositor’s records

Which of the following items that appeared on the bank reconciliation did not require an adjusting entry

deposits in transit

The mount of deposits in transit is included on the bank statement as an

addition to the balance per bank statement

What entry is required in the depositor’s accounts to record outstanding checks?

none

The amount of the outstanding checks is included on the bank reconciliation as a

deduction from the balance per bank statement

Receipts from cash sales of $9,500 were recorded incorrectly in the cash receipts journal as $5,900. What entry is required in the depositor’s accounts?

debit cash; credit sales

Receipts from cash sales of $9,500 were recorded incorrectly in the cash receipts journal as $5,900. This item would be included on the bank reconciliation as an

addition to the balance per depositor’s records

Accompanying the bank statement was a debit memorandum for an NSF check received from a customer. What entry is required in the depositor’s accounts

debit Accounts Receivable; credit cash

Accompanying the bank statement was a credit memorandum for a short-term note collected by the bank for the depositor. This item is an

addition to the balance per depositor’s records

A check drawn by a depositor in payment of a voucher for $725 was recorded in the journal as $257. What entry is required in the depositor’s accounts?

debit Accounts payable; credit cash

Accompanying the bank statement was a credit memorandum for a short term note collected by the bank for the customer. what entry is required in the depositor’s accounts?

debit cash; credit notes receivable

The amount of cash to be reported on the balance sheet at June 30 is the

adjusted balance appearing in the bank reconciliation for June 30

During the month, a company was informed that a check they had issued was accidentally destroyed. On the bank reconciliation, the company would

add the amount to the balance per the depositor’s records

Which of the following would be deducted from the balance per books on a bank reconciliation?

service charges

Which of the following would be added to the balance per books on a bank reconciliation?

Notes collected by the bank

Which of the following would be subtracted from the balance per books on a bank reconciliation?

service charges

A bank reconciliation should be prepared

to explain any difference between the depositor’s bank balance per books with the balance per bank

Which of the following would be subtracted from the balance per bank on a bank reconciliation

outstanding checks

A $100 petty cash fund has cash of $16 and receipts of $80. The journal entry to replenish the account would include a credit to

Cash for $84

A $100 petty cash fund has cash of $16 and receipts of $86. The journal entry to replenish the account would include a

credit to cash over and short of $2

A $100 petty cash fund has cash of $18 and receipts of $80. The journal entry to replenish the account would include a

debit to Cash over and Short for $2

A $100 petty cash fund contains $92 in petty cash receipts and $6.50 in currency and coins. The journal entry to record the replenishment of the fund would include a

debit to Cash short and over for $1.50

Entries are made to the petty cash account when

establishing the fund

They type of account and normal balance of petty cash is an

asset, debit

The debit recorded in the journal to reimburse the petty cash fund is to

various accounts for which the petty cash was disbursed

During a bank reconciliation process,

outstanding checks are subtracted and deposits in transit are added to the bank statement balance

Cash equivalents include

money market accounts and commercial paper

Which of the following would not be included with the Cash and Equivalents on the Balance Sheet?

Short term receivables

In the normal operation of business you receive a check from a customer and deposit it into your checking account. With your bank statement you are advised that this check for $450 is "NSF" The bank also informs you that due to the amount of activity on your business account the monthly service charge is $40. During a bank reconciliation

subtract both values from balance according to books

A minimum cash balance required by a bank is called

compensating balance

Cash equivalents

will be converted to cash within 90 days