Accounting Unit 7

Which of the following terms is used to authorize the bank to deposit the cash into the payee's bank account and not allow the funds to be transferred to any other account or individual?

restrictive endorsement

Assume a company's checks were stolen. The thief wrote checks to different stores and forged the signatures. What would the bank use to identify the forged signatures?

signature card

Which of the following items would not be considered cash?

the company computer and office furniture

A check stub includes more information than normally included on a check.

true

An error in recording a $555 check as $55 will be found if a bank reconciliation is correctly prepared.

true

Deposit slips may vary from bank to bank; however, they must always include the depositor's name and address, the bank the money is deposited in, the bank's routing numbers and account, a list of currency and coin, and each individual check deposited.

true

Theft of cash may be detected by comparing the signature on the company checks with the signatures on the bank signature card.

true

True or false. When there's an increase in a company's checking account, it is included as a credit memo (CM).

true

When preparing a bank reconciliation, outstanding checks, or checks that have not yet cleared the bank account, would be shown as a decrease in the bank account balance.

true

Choose the one of the four controls listed that could minimize or prevent the situation below from occurring. At the end of each week, Ms. Smith, an employee, was to deposit the cash in the bank. The deposit totaled $2,850. The cash register tapes totaled $3,390. She could not find or account for the $540 difference.

All cash received is deposited in the bank at the end of the day.

Tyler Jones is authorized to prepare and sign checks for the company. He also enters the checks into the ledger. He wrote a $500.00 check to Jones Repair, a fictitious company and entered the check into the ledger as a repair expense. He deposited the check into his own account. Which of the following internal controls would have prevented the theft?

All checks require two signatures.

Choose the one of the four controls listed that could minimize or prevent the situation below from occurring. An employee wrote and cashed a $1,000 check to a fictitious company. The employee deposited the check in his own bank account. He recorded the check in the journal as a payment for supplies.

An invoice or voucher is required before payments can be made.

Assume the bank recorded a $550 deposit as $500. The bank later found the error. How would the $50 correction be identified on the bank statement?

EC

A doctor's office prepares a receipt for each payment received by patients. Which of the following situations would this internal control help to prevent?

The accountant is unable to determine where a $50 bill came from that was included in the day's cash receipts.

Which of the following items would not be considered cash?

a $35 balance due from a customer for services provided

Which of the following items would not be considered cash?

a credit card with a $5,000 available balance

Which of the following items would not be considered cash?

a note from a customer promising to pay $25 on their account next week

Which of the following items would not be considered cash?

inventory worth $5,000 held for resale

Check #1267 was written and recorded as a $55.72 repair expense. The bank recorded the check as $52.72. On a bank reconciliation, this would be shown as a(n)

decrease in the bank account balance

The April 23 deposit for sales revenues was properly recorded in the ledger as $752.80. The bank recorded the deposit as $782.80. On a bank reconciliation, this would be shown as a(n)

decrease in the bank account balance

The May 22 sales were deposited at the bank. The deposit was actually for $860.23. When the bank processed the deposit, an error was found. The bank incorrectly recorded the deposit for $892.23. On a bank reconciliation, this would be shown as a(n)

decrease in the bank account balance

A $72 NSF check was returned from Mr. Smith, a company client. On a bank reconciliation, this would be shown as a(n)

decrease in the ledger cash account balance (book balance)

Check #1021 was written to the office supply store for $32. It was recorded in the ledger as $23 office supplies. On a bank reconciliation, this would be shown as a(n)

decrease in the ledger cash account balance (book balance)

Check #628 for $98 was not recorded in the ledger. On a bank reconciliation, this would be shown as a(n)

decrease in the ledger cash account balance (book balance)

ATM stands for "automated transfer machine."

false

Cash is only considered to be the currency and coin the company deposits into the checking account.

false

Checks are the most common method used to pay bills and expenses since they there is no way a check can be altered.

false

Mike Taylor paid you $25 for accounting services. You deposited the check into your bank account. To make sure the bank can always identify and trace the check, you will list the check on the deposit slip by Mike's last name and the amount of the check.

false

The sole purpose of a signature card is to assign a number to the bank account.

false

When preparing a bank reconciliation, cash deposits recorded in the ledger but not listed on the bank statement are included as an increase to the ledger cash account (book balance).

false

When preparing a bank reconciliation, interest expense charged by the bank is shown as an increase to the ledger cash account (book balance).

false

When preparing a bank reconciliation, there are no increases to the ledger cash account (book balance).

false

Eight checks totaling $1,536.82 from dental patients paying for services have not yet cleared the bank. On a bank reconciliation belonging to the dental office this would be shown as a(n)

increase in the bank account balance

The $1,032.32 cash deposited at the bank on July 31 was not listed on the bank statement. On a bank reconciliation, this would be shown as a(n)

increase in the bank account balance

The September 15 sales were deposited at the bank. The deposit was actually for $550.30. When the bank processed the deposit, an error was found. The bank recorded the deposit as $540.30. On a bank reconciliation, this would be shown as a(n)

increase in the bank account balance

The bank collected $1,500 for the company from the company's client. On a bank reconciliation, this would be shown as a(n)

increase in the ledger cash account balance (book balance)

The bank paid $6.45 in interest income to the company. On a bank reconciliation, this would be shown as a(n)

increase in the ledger cash account balance (book balance)