AC 210 CHAPTER 5
NSF checks from customers should be a(n) ______ on a bank reconciliation. )addition to the bank balance )subtraction from the bank balance )addition to the book balance )subtraction from the book balance
subtraction from the book balance
A process for approving and documenting all purchases and payments on account is referred to as a: )voucher system. )imprest system. )reconciliation procedure. )cash receipts process.
voucher system.
Each cash drawer is assigned to only one employee in a supermarket. This is an example of the internal control principle of: )establishing responsibility. )segregating duties. )independently verifying. )bonding employees.
establishing responsibility.
A deposit in transit on last month's bank reconciliation is shown as a deposit on the bank statement this month. As a result, in preparing this period's reconciliation, the amount of this deposit should: )be added to the book balance of cash. )be deducted from the book balance of cash. )be added to the bank balance of cash. )not be included as a reconciling item.
not be included as a reconciling item.
A check is said to have cleared the bank when: )it is returned NSF. )it bounces. )the bank withdraws the amount of the check from the check writer's account. )it is presented to a financial institution for deposit or cash.
the bank withdraws the amount of the check from the check writer's account.
If the company's accountant mistakenly recorded a $58 deposit as $85, the error would be shown on the bank reconciliation as a(n): )$27 addition to the book balance )$85 deduction from the book balance )$27 deduction from the book balance )$85 addition to the book balance
$27 deduction from the book balance The book balance is adjusted since the company did not know about this item until the bank reconciliation was prepared. Think about how the item was recorded and how it should have been recorded. Recorded as deposit (check) $85 Adjustment needed (27) Actual amount of deposit (check) $58
In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that check number 2889 for December's utilities was correctly written and drawn for $790 but was erroneously entered into the accounting records as $970. The journal entry to adjust the books for the bank reconciliation would include a debit to: )Utility Expense and a credit to Cash for $180. )Cash and a credit to Utility Expense for $180. )Utility Expense and a credit to Cash for $790. )Cash and a credit to Utility Expense for $790.
Cash and a credit to Utility Expense for $180.
Which of the following items appearing on a bank reconciliation require a journal entry to bring the Cash account up-to-date? )Deposit in transit )Check from customers returned as NSF )Outstanding check )An error made by the bank in recording a deposit
Check from customers returned as NSF
Which of the following is not a significant objective of the Sarbanes-Oxley (SOX) Act? Conceal fraud Encourage good character Counteract incentives for fraud Reduce opportunities for fraud
Conceal fraud
This month's bank statement includes a check from a customer that was marked NSF. How would this item be treated on the bank reconciliation? Is it added to or deducted from the bank balance or the company's cash (book) balance? It would be deducted from the book balance. It would be added to the bank balance. It would be deducted from the bank balance. It would be added to the book balance.
It would be deducted from the book balance.
Considering current laws that deal with misstatements of financial results, which of the following statements is correct? Managers found guilty can escape paying fines if they declare bankruptcy. Managers can be sentenced to maximum jail terms of up to 20 years for each violation. Managers found guilty may keep any bonuses or profits from the misrepresentation if their fines are less than such bonuses or profits. Whistleblowers who secretly submit concerns about questionable accounting practices will be fired.
Managers can be sentenced to maximum jail terms of up to 20 years for each violation.
Which of the following is not related to the segregation of duties for cash received in person? Cashiers are responsible for the collection of cash and issuing a receipt at the point of sale. A supervisor is responsible for collecting the cash at the end of each cashier's shift and depositing it in the bank. Members of the accounting department are responsible for ensuring that the receipts from cash sales are properly recorded in the accounting system. Members of the accounting department count the cash collected and deposit it in the bank.
Members of the accounting department count the cash collected and deposit it in the bank.
Which of the following situations would cause the balance per bank to be more than the balance per books? )Deposits in transit )Service charges )Outstanding checks )Checks from customers returned as NSF
Outstanding checks
Which of the following would be deducted from the ending cash balance per bank when performing a bank reconciliation? Electronic fund transfers Service charges Deposits in transit Outstanding checks
Outstanding checks
Deposits in transit have: been recorded by the company but not yet by the bank. been recorded by the bank but not yet by the company. not been recorded by the bank or the company. been recorded by both the bank and the company.
been recorded by the company but not yet by the bank.
When you identify outstanding checks in performing a bank reconciliation, you must: )deduct the amount of the outstanding checks from the balance per books. )deduct the amount of the outstanding checks from the balance per bank. )add the amount of the outstanding checks to the balance per books. )add the amount of the outstanding checks to the balance per bank.
deduct the amount of the outstanding checks from the balance per bank.
A bank service charge should be a(n) ______ on a bank reconciliation. addition to the bank balance deduction from the bank balance addition to the book balance deduction from the book balance
deduction from the book balance