Accounting Chapter 5
True
If a bank does not receive payment from the person who signed the check, each endorser of the check is individually liable for payment
no one - it must be deposited
If a check is endorsed on the back with the words "For deposit only," the check can be cashed by ____.
a new check should be written and VOID should be written on the check stub and check
If any kind of error is made in preparing a check, ____.
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.
True
Banks usually refuse to accept altered checks.
False
Most banks will accept postdated checks.
True
The amount of a check is written twice on each check.
$5,300
The bank statement shows a checking account balance of $5,500.00. There are outstanding checks totaling $600.00, an outstanding deposit of $400.00, and a bank service charge of $15.00. The checking account balance should be ____.
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.
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.
False
The petty cash fund is a liability with a normal debit balance.
False
The petty cash slip is the source document for the entry to replenish petty cash.
True
The source document for a debit card purchase is a memorandum.
True
The source document for an electronic funds transfer is a memorandum.
memorandum
The source document for journalizing a bank service charge is a ____.
memorandum
The source document for journalizing an electronic funds transfer is a ____.
False
There are four types of endorsements commonly used: blank, special, original, and restrictive.
True
Using a memorandum as the source document for a dishonored 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 the journal.
True
When a bank statement is received, the depositor should verify its accuracy immediately.
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.
False
When petty cash is replenished, Petty Cash is debited and Cash is credited.
False
When the petty cash fund is replenished, the balance of the petty cash account increases.
True
When writing a check, the first step is to prepare the check stub.
deposit slip
Each time cash or checks are placed in a bank account, the customer prepares a ____.
True
In accounting, money is usually referred to as cash.
True
In order to control cash, one common method is to ensure that cash payments are paid by pre-numbered checks.
False
Most banks do not look at the date the check is written and will withdraw money from the depositor's account anytime
False
Most businesses make major payments with cash.
True
Not only do banks charge a fee for handling a dishonored check, 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.
False
Ownership of a check cannot be transferred.
debit Petty Cash $200; credit Cash $200
The entry to establish a $200.00 petty cash fund is ____.
False
A bank reconciliation form is prepared by the bank to ensure that the bank has not made mistakes.
True
A bank requires that the signature of the person authorized to sign checks be on the signature card.
check
A business form ordering a bank to pay cash from a bank account is a ____.
True
A check is a common business form for ordering a bank to take cash from its checking account.
the same signature as on the signature card
A check must be signed with ____.
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 on it is a postdated check.
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.
petty cash slip
A form showing proof of a petty cash payment is a ____.
anyone who has the check
A lost check with a blank endorsement on it can be cashed by ____.
False
A memorandum is the source document for the entry to record establishing a petty cash fund.
at the end of the month
A petty cash fund is always replenished ____.
False
A petty cash fund is used for making large cash payments without writing checks.
False
A signature card for a business's checking account should show only the signature of the business owner.
an endorsement
A signature or stamp on the back of a check transferring ownership is ____.
False
After a deposit is recorded on the check stub, a checkbook subtotal is not calculated until the next check is written.
True
An endorsement consisting of the words "Pay to the order of" and a new owner's name is a special endorsement.
True
An endorsement consisting only of the endorser's signature is a blank endorsement.
True
An endorsement on a check may be either written or stamped.
special endorsement
An endorsement on the back of a check consisting of the words "Pay to the order of" and a new check owner's name is a ____.
a blank endorsement
An endorsement on the back of a check consisting only of a signature is ____.
True
An important aspect of cash control is verifying that the information on a bank statement and in a checkbook is 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
As petty cash is paid out, the amount in the petty cash box decreases.
False
As petty cash is paid out, the balance of the petty cash account decreases.
True
Banks deduct service charges from customers' checking accounts without requiring customers to write a check for the amount.
False
Because cash transactions occur more frequently than other transactions, the chances for making recording errors affecting cash are less.
False
Blank endorsements should be used when sending checks through the mail.
