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
x

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