Accounting: Chptr 9_Cash Receipts Cash Payments, and Banking Procedures

Most businesses use the petty cash fund to pay for

small expenditures.

A firm's bank reconciliation shows, in part, a book balance of $15,820, a deposit in transit of $300, an NSF check of $400, outstanding checks totaling $10,000, and a service charge of $20. Its adjusted book balance is

15,400

A cash sale of merchandise would be recorded in the a. cash payments journal. b. general journal.

cash receipts journal

petty cash fund

Petty cash fund A special-purpose fund used to handle payments involving small amounts of money is used to handle payments involving small amounts of money, such as postage stamps, delivery charges, and minor purchases of office supplies.

Which of the following statements is correct? a. A transaction that is properly recorded in the cash payments journal will always include the recording of an amount in the Cash Debit column. b. Purchase discounts is a contra revenue account. c.The entry to record a cash purchase of merchandise would include a debit to Purchases and a credit to Cash. d.The entry to record the payment of an invoice within the cash discount period would include a debit to the Purchases Discounts account.

The entry to record a cash purchase of merchandise would include a debit to Purchases and a credit to Cash.

The payment of a purchase invoice when a cash discount is taken includes a a. debit to Accounts Payable, a credit to Purchases Discounts, and a credit to Cash. b.debit to Purchases, credit to Purchases Discounts, and credit to Cash c. debit to Accounts Payable, debit to Purchases Discounts, and credit to Cash.

a. debit to Accounts Payable, a credit to Purchases Discounts, and a credit to Cash.

A check issued for $890 to pay a vendor on account was recorded in the firm's records as $980; the canceled check was properly listed on the bank statement at $890. To arrive at an accurate balance on a bank reconciliation statement, the error should be a. added to the bank statement balance. b. deducted from the book balance. c added to the book balance

added to the book balance

Upon collection of the amount due on an interest-bearing promissory note from a customer, the accountant would debit Cash, credit Notes Receivable, and a. debit Interest Expense b. credit Interest Income. c. credit Interest Expense

b. credit Interest income.

If a check written by a firm is not canceled by the bank and returned with the month's bank statement, the firm should

consider this check as outstanding when preparing the bank reconciliation.

At the end of the month, after the equality of the debits and credits recorded in the cash payments journal is proved by comparing the column totals, the summary posting from the cash payments journal would include a:

debit to Accounts Payable, a credit to Purchase Discount and a credit to Cash. In addition, amounts in the "Other Accounts Debit Amount column" would also be posted as debits to those accounts.

The entry to replenish a petty cash fund includes a

debits to various expense accounts and a credit to Cash.

Identify all the items that would be recorded in a cash account: a. Checks b. Currency c. Coins d. Funds on deposit e. All of the above

e