Ch.5 accounting true/false
Encore Music maintains a petty cash fund for making large cash payments without writing checks
False
If any kind of error is made in preparing a check, a new check should be prepared and the old check should be thrown away immediately
False
Most banks don't look at the date the check is written and will withdraw money from the depositors account anytime
False
The journal entry for a payment on account using electronic funds transfer is exactly the same as when the payment is made by check
False
The petty cash slip is the source document for the entry to replenish petty cash
False
There are four types of endorsements commonly used: blank, special, original, and restrictive.
False
When petty cash is replenished, petty cash is debuted and cash is credited
False
When the petty cash fund is replenished, the balance of the petty cash account increases
False
An endorsement consisting of the words "pay to the order of" and a new owners name is a special endorsement
True
An endorsement consisting only of the endorsers signature is a blank endorsement
True
An endorsement on a check may either be written or stamped
True
An important aspect of cash control is verifying that the information on a bank statement and a checkbook are in agreement
True
An outstanding check is one that has been issued but not yet reported on a bank statement by the bank
True
Anytime a payment is made from the petty cash fund, a petty cash slip is prepared showing proof of a petty cash payment
True
Banks deduct service charges from customers checking accounts without requiring customers to write a check for that amount
True
Banks usually refuse to accept altered checks
True
In accounting, money is usually referred to as cash
True
Not only do banks charge a fee for handling dis honored checks but they also deduct the amount of the check from the account
True
On a bank statement reconciliation the adjusted check stub balance must be the same as the adjusted bank balance
True
Blank endorsements should be used when sending checks through mail
False
A debit card holder still must remember to write a check for the purchase even though the debit card has been used for the purchase
False
A memorandum is the source document for the entry to record establishing a petty cash fundraise
False
A petty cash fund is used for making large cash payments without writing checks
False
After a deposit is recorded on the check stub, a checkbook subtotal is not calculated until the next check is written
False
Because cash transactions occur more frequently than other transactions the chances for making recording errors affecting cash are less
False
A bank requires that the signature of the person authorized to sign checks be on the signature card
True
A check that contains errors must be marked with the word VOID and another check must be written
True
A check with a blank endorsement can be cashed by anyone who has the check
True
A check with a future date is a post dated check
True
The amount of a check is written on the check twice on each check
True
The only difference in the journal entry for a cash payment by check and a cash payment by electronic funds transfer is the source document
True
The source document for a debit card purchase is a memorandum
True
The source document for an electronic funds transfer is a memorandum
True
Using a memorandum as the source document for a dis honored check is an application of the accounting concept objective evidence
True
Using a petty cash fund usually decreases the number of checks that have to be written
True
Voided checks should be recorded in a journal
True
When a business uses EFT to pay vendors previous arrangements have been made with its bank to process the transactions
True
When a deposit is made in a bank account, the bank issues a receipt.
True
When writing a check, the first step is to prepare the check stub
True
