ACC 200 exam 2
which of the assets listed below is considered to be the most liquid?
Cash
If a company erroneously records a $500 deposit as $50 in its records, which of the following must occur when reconciling its bank statement?
The company must increase the balance per its records by $450.
outstanding checks
a bank reconciling item that must be subtracted from the unadjusted bank balance when preparing a bank reconciliation
Nonsufficient Funds (NSF) Check
a bank reconciling item that must be subtracted from the unadjusted book balance when preparing a bank reconciliation
Petty cash
a fund used to pay for small amounts to avoid the time and expense of paying by check
cash equivalents
amounts on deposit with financial institutions and investments primarily held in money market accounts, with original maturities of less than 90 days
Cost
any expenditure necessary to acquire an asset and to prepare it for use
Book value
cost - accumulated depreciation
Cash collected and recorded by a company but not yet reflected in a bank statement are known as
deposits in transit
service charges
fees charged by the bank for checking account services
The control activity "segregation of duties" is most effective in
preventing collusion
Residual value (salvage value)
the amount of cash or trade in consideration that is expected when an asset is retired from service
Operating cycle
the elapsed time between the purchase of goods for resale and the collection of cash from customers
Cash over and short
an account used to record any discrepancies between the cash account records and the actual amount of cash received
Deposit in transit
an amount received and recorded by the business, but not yet recorded by the bank
Equipment with a residual value of $50,000 at the end of 10 years was acquired at the beginning of 2019 for $500,000. Assuming the use of the straight-line depreciation method, the journal entry to record depreciation expense for 2021 will have a debit to
Depreciation Expense and a credit to Accumulated Depreciation for $45,000.
Depreciation
the process of allocating the cost of a tangible fixed asset to expense over the assets useful life
bank reconciliation
the process of ensuring that the company's accounting records are consistent with with the banks accounting records
