Session 9 - Quiz Questions

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

credit Interest Income.

The entry to replenish a petty cash fund includes a: debit to Cash and a credit to Petty Cash. debit to Petty Cash Fund and a credit to Cash debits to various expense accounts and a credit to Petty Cash Fund. debits to various expense accounts and a credit to Cash.

debits to various expense accounts and a credit to Cash.

The safest form of endorsement of a check for business purposes is: no endorsement. the blank endorsement. the restrictive endorsement. the full endorsement.

the restrictive endorsement.

The following data were taken from a firm's bank reconciliation statement: book balance, $7,910; deposit in transit, $150; NSF check from a customer, $200; outstanding checks, $5,000; bank service charge, $10. Its adjusted book balance is: $7,720 $8,120 $7,700 $8,100

$7,700

A firm's bank reconciliation shows, in part, a book balance of $9,200, a deposit in transit of $920, an NSF check of $560, outstanding checks totaling $3,100, and a service charge of $50. Its adjusted book balance is: $7,020 $8,590 $9,710 $9,810

$8,590

Which of the following is a check that has been paid by the bank during the month? dishonored check canceled check outstanding check postdated check

canceled check

Sara's Beauty Salon keeps a $100 change fund. At the end of the day, sales per the register tape were $885, and the cash count was $992. What is the amount of the cash shortage or overage? $7 over $7 short $107 over $107 short

$7 over

On the bank reconciliation statement, you would not find a list of: deposits in transit. canceled checks. outstanding checks NSF checks.

canceled checks.

Which of the following are features of online banking? A business can deposit checks using a dedicated scanner A business can receive electronic funds transfers from customers. A business can receive alerts from the bank via text for unusual account activity. All of these are features of online banking.

All of these are features of online banking.

On July 5, a company's accountant downloaded the firm's June 30 bank statement from the bank website. The accountant noted that an electronic funds transfer for $9,800 from Terra Cota Cataluna, a customer located in Spain, was received by the bank on June 30 but had not been recorded in the company's accounting records. What effect will this transaction have on the company's June 30 bank reconciliation? An addition to the balance on bank statement. A deduction from the balance on bank statement. An addition to the balance in books. A deduction from the balance in books.

An addition to the balance in books.

All of the following are essential cash payment internal controls except: Issuing checks only with an approved bill, invoice, or other document that describes the reason for the payment. Using prenumbered check forms. Ensuring that the person who records cash payments should be the one who both approves payments and writes the checks. Making all payments by check except for payments from special-purpose cash funds such as a petty cash fund or a travel and entertainment fund.

Ensuring that the person who records cash payments should be the one who both approves payments and writes the checks.

Why does a payee endorse a check before depositing it? It is the legal process by which the payee transfers ownership of the check to the bank. It is a form of identification verification. The check will be paid faster by the bank if it is endorsed. All of these choices are correct.

It is the legal process by which the payee transfers ownership of the check to the bank.

Which of the following is not an internal control procedure that applies to petty cash? Assign one person to control the petty cash fund. This person has sole control of the money and is the only one authorized to make payments from the fund. Limit the amount set aside for petty cash to the approximate amount needed to cover one year's payments from the fund. Obtain a petty cash voucher for each payment. Use the petty cash fund only for small payments that cannot conveniently be made by check.

Limit the amount set aside for petty cash to the approximate amount needed to cover one year's payments from the fund.

For which of the following reconciling items would a company prepare a journal entry after completing the bank reconciliation statement? outstanding check NSF check check incorrectly charged by the bank to the company's account deposit in transit

NSF check

Which of these bank reconciliation items require journal entries? outstanding checks deposits in transit a check properly written by the company but paid at the wrong amount by the bank NSF check from a customer

NSF check from a customer

Which of the following is not an example of good internal control over cash receipts? Cash receipts should be deposited in the bank promptly. Cash receipts should be kept in a cash register, a locked cash drawer, or a safe while they are on the premises. The same individual who handles and records cash receipts should prepare the bank reconciliation. Cash receipts should be entered in the accounting records promptly.

The same individual who handles and records cash receipts should prepare the bank reconciliation.

Which of the following would be considered a cash equivalent? a certificate of deposit with a maturity of six months a certificate of deposit with a maturity of three months a note receivable from a customer with a maturity of six months a note receivable form a customer with a maturity of three months

a certificate of deposits with a maturity of three months

Which account will be credited when a promissory note is used to replace an accounts receivable balance? notes receivable cash cash short or over accounts receivable

accounts receivable

Which items are considered cash? currency funds on deposit in the bank money orders all of these choices are correct

all of these choices are correct

Petty cash is categorized as a(n): expense revenue liability asset

asset

What type of account is Petty Cash? asset liability contra asset expense

asset

Which of the following is true for the Cash Short or Over account? Cash Short or Over is debited when there is a cash shortage. Cash Short or Over is debited when there is a cash overage. The Cash Short or Over account has a normal debit balance. The Cash Short or Over account has a normal credit balance.

cash short or over is debited when there is a cash shortage

If a check written by a firm is not canceled by the bank and returned with the month's bank statement, the firm should: adjust the balance in the firm's checkbook to reflect the data that appears in the bank's records. immediately notify the bank requesting that it correct its records. consider this check as outstanding when preparing the bank reconciliation. consider this check to be lost and issue a replacement check

consider this check as outstanding when preparing the bank reconciliation.

Which journal entry could be used to record the replenishment of the petty cash fund? debit Petty Cash, credit Cash debit Supplies, debit Delivery Expense, credit Cash debit Supplies, debit Delivery Expense, credit Petty Cash debit Cash, credit Petty Cash

debit Supplies, debit Delivery Expense, credit Cash

How would the receipt of a $62 refund for supplies returned be recorded in a general journal? The supplies were paid for with cash. debit cash, credit accounts payable debit supplies, credit cash debit accounts payable, credit supplies debit cash, credit supplies

debit cash, credit supplies

Which of the following records the receipt of a promissory note from a customer with an overdue accounts receivable balance? debit cash, credit accounts receivable debit cash, credit notes receivable debit notes receivable, credit accounts receivable debit accounts receivable, credit notes receivable

debit notes receivable, credit accounts receivable

Which of the following is the journal entry to record the establishment of a petty cash fund? debit cash, credit petty cash debit petty cash, credit casj debit petty cash, credit accounts payable debit accounts payable, credit petty cash

debit petty cash, credit cash

On the bank reconciliation, outstanding checks should be: added to the balance on bank statement. deducted from the balance on bank statement. added to the balance in books deducted from the balance in books.

deducted from the balance on bank statement.

A check issued for $540 to pay a vendor on account was recorded in the firm's records as $450; the canceled check was properly listed on the bank statement at $540. To arrive at an accurate balance on a bank reconciliation statement, the error should be: added to the book balance. added to the bank statement balance. deducted from the book balance. deducted from the bank statement balance.

deducted from the book balance.

Which of the following does not require an adjustment to the financial records? deposits in transit bank service charge check that was incorrectly recorded by the firm at $115 but was paid by the bank at its correct amount of $1,115 NSF check from a customer

deposits in transit

What is the term for the person or firm issuing a check? drawee drawer payee bank

drawer

Which of the following is not an example of good internal control over cash payments? make all payments from petty cash instead of using checks use prenumbered checks issue checks only with an approved bill have checks prepared and recorded in the accounting records by someone other than the person approving payments

make all payments from petty cash instead of using checks

Which of the following would be subtracted from the bank statement balance on a bank reconciliation statement? NSF check bank service charge outstanding check deposit in transit

outstanding check

Discount Store, a retail business, keeps a $200 change fund in its cash register. If Discount started business on September 29 and had cash sales per the cash register on that day of $700, but the cash count showed $904, then the cash register was: over by $204. short by $4. over by $4. over by $4.

over by $4.