Accounting Chapter 7 Final

A petty cash fund of $200 has $17 in cash, $180 in petty cash vouchers, and $3 in miscellaneous receipts not included with the petty cash vouchers. The proper journal entry to replenish the fund would include a credit to Cash for a.$183. b.$3. c.$17. d.$180.

A

If, in the effort to prove cash, a shortage is found, the amount is treated as a(n) a.expense. b.petty cash transaction. c.cash receipts transaction. d.revenue earned transaction.

A

In reconciling a bank statement, the bank statement balance is $1,000 and the balance per books is $1,205. A bank service charge is $5; a deposit in transit totals $500; and outstanding checks total $300. The journal entry for a bank service charge would include a.debiting Miscellaneous Expense and crediting Cash. b.debiting Accounts Payable and crediting Cash. c.debiting Cash and crediting Owner's Capital. d.debiting Cash and crediting Miscellaneous Expense.

A

On a bank reconciliation, deposits that were not entered by the bank before the bank statement was prepared are known as a.deposits in transit. b.NSF deposits. c.unrecorded deposits. d.restrictive deposits.

A

The check written to establish the petty cash fund is entered in the journal by a.debiting Petty Cash and crediting Cash. b.debiting Owner's Capital and crediting Petty Cash. c.debiting Petty Cash and crediting Owner's Capital. d.debiting Cash and crediting Petty Cash.

A

The petty cash payments record indicates classified expenditures as follows: Automobile Expense, $20; Supplies Expense, $12; Postage Expense, $6; and Miscellaneous Expense, $5. The journal entry to replenish the petty cash fund would include a credit to Cash for a.$43. b.$11. c.$5. d.$38.

A

To reconcile the bank statement, which of the following amounts would be subtracted from the checkbook balance? a.service charge b.amounts collected by the bank for the depositor's account c.outstanding checks d.deposits in transit

A

A check involves three parties. The bank in which the drawer has money on deposit is called the a.payee. b.drawee. c.drawer. d.endorser.

B

A check involves three parties. The person directed to receive the money is called the a.endorser. b.payee. c.drawee. d.drawer.

B

A petty cash fund of $200 has $27 in cash, $170 in petty cash vouchers, and $3 in miscellaneous receipts not included with the petty cash vouchers. The debit to the Cash Short and Over would be a.$170. b.$0. c.$173. d.$27.

B

A special multi-column record that supplements the regular accounting records and from which no posting is done is called a a.journal. b.petty cash payment record. c.ledger. d.bank reconciliation form.

B

Cash Sales from the cash register tapes totaled $882. There is a change fund of $100. The cash count indicates that $984 is in the cash drawer. What journal entry would be required? a.debit Miscellaneous Expense for $2; credit Cash Short and Over for $2 b.debit Cash for $884; credit Revenues for $882, and Cash Short and Over for $2 c.debit Cash Short and Over for $2; credit Miscellaneous Expense $2 d.debit Cash for $982, Cash Short and Over for $2; credit Revenues for $984

B

If the person who is named as payee on a check transfers the right to receive the money by signing his/her name on the back of the check, the signature is called a a.dishonored endorsement. b.blank endorsement. c.restrictive endorsement. d.regular endorsement.

B

On a bank reconciliation, checks issued during the period that were not presented to the bank for payment before the bank statement was prepared are known as a.dishonored checks. b.outstanding checks. c.deposits in transit. d.NSF checks.

B

The bank statement for a checking account normally shows the a.checks written but not yet cashed. b.amount of deposits and other credits added during the period. c.amounts of deposits to be made. d.amounts to be collected by the bank for the depositor's account.

B

The process of bringing the book and the bank balance into agreement is called a.preparing a statement of payment. b.reconciling the bank statement. c.preparing a statement of disbursements. d.proving the cash.

B

To complete transactions with the bank, electronic funds transfer (EFT) systems use a.drafts or money orders. b.a computer. c.checks. d.currency.

B

To reconcile the bank statement, which of the following amounts would be subtracted from the bank statement balance? a.amounts collected by the bank for the depositor's account b.outstanding checks c.service charge d.deposits in transit

B

A debit to Accounts Receivable for $50 and a credit to Cash for $50 would be an accurate journal entry to record a.ATM deposits. b.petty cash. c.not sufficient funds (NSF) checks. d.electronic funds transfers (EFTs).

C

A special form of receipt showing the name of the payee, the purpose of the payment, and the account to be charged for each petty cash payment is known as a a.petty cash check. b.petty cash document. c.petty cash voucher. d.petty cash register.

C

The petty cash payments record indicates classified expenditures as follows: Automobile Expense, $20; Supplies Expense, $12; Postage Expense, $6; and Miscellaneous Expense, $5. The transaction would include a.debiting Cash. b.crediting Supplies Expense. c.debiting Automobile Expense. d.crediting Accounts Payable.

C

To reconcile the bank statement, which of the following amounts would be subtracted from the checkbook balance? a.amounts collected by the bank for the depositor's account b.deposits in transit c.service charge d.outstanding checks

C

To sign the back of a check with the name of the company and "Pay to any bank" is an example of a a.signature card. b.blank endorsement. c.restrictive endorsement. d.canceled check.

C

A check involves three parties. The person who orders the bank to pay a certain amount of money is called the a.endorser. b.payee. c.drawee. d.drawer.

D

Check No. 450, a payment of $54 for the telephone bill, was incorrectly entered on the check stub as $45. Which of the following adjustments needs to be made? a.decrease the bank statement balance b.increase the bank statement balance c.increase the book balance d.decrease the book balance

D

Each check should be identified by its a.AAB number. b.CPA number. c.MBA number. d.ABA number.

D

In reconciling a bank statement, the bank statement balance is $1,000 and the balance per books is $1,205. A bank service charge is $15; a deposit in transit totals $500, and outstanding checks total $300. The adjusted book balance is a.$1,205. b.$1,490. c.$1,505. d.$1,190.

D

To reconcile the bank statement, which of the following amounts would be added to the bank statement balance? a.amounts collected by the bank for the depositor's account b.outstanding checks c.service charge d.deposits in transit

D

Whenever the bank mails a credit memo to the depositor indicating the amount of interest credited to the account, the transaction that would be entered in the accounting records of the depositor would include a.debiting Cash and crediting Interest Expense. b.debiting Interest Earned and crediting Cash. c.debiting Interest Expense and crediting Cash. d.debiting Cash and crediting Interest Earned.

D

A depositor is not responsible or liable to the bank for items deposited that are not honored when presented for payment. T/F

False

A restrictive endorsement makes a check payable to any bearer.

False

A restrictive endorsement means that the check is payable to any bearer. T/F

False

A special ledger account entitled "Change Fund" is used to keep track of day-to-day shortages and overages of cash.

False

Cash receipts of $719 and a cash count of $715 would indicate a cash overage.

False

Cash usually means only currency and coins. T/F

False

If the cash short and over account has a credit balance at the end of the fiscal year, the balance represents an expense or loss.

False

If the cash short and over account has a debit balance at the end of the fiscal year, the balance represents a revenue.

False

If the depositor's book balance is not the same as the bank's book balance, an error has occurred.

False

In reconciling the bank statement, the outstanding checks are added to the balance shown on the bank statement.

False

On a deposit ticket, checks should be listed in numerical order.

False

Posting must be done from the petty cash payments record.

False

The bank in which the depositor has money on deposit is known as the drawer.

False

The depositor who orders the bank to pay a certain amount of money is known as the drawee.

False

The difference between the balance in the cash account on the depositor's books and the bank's books is usually due to errors.

False

The petty cash fund should be replenished only at the end of each accounting period so that the accounts are brought up-to-date.

False

The petty cash payments record is a special journal that takes the place of entering these transactions in the two-column journal.

False

When a check is written to replenish the petty cash fund, it is entered in the journal by debiting the proper accounts indicated in the Distributions columns of the petty cash record and by crediting Cash Over and Short.

False

When it is necessary to replenish the petty cash fund, the petty cashier prepares a statement of payments.

False

A cash shortage is entered as a debit to Cash Short and Over and a credit to Cash.

True

A check deposited that is not paid because the drawer did not have sufficient funds is called an NSF check.

True

A debit journal entry to the cash short and over account is used to record a cash shortage.

True

A depositor may endorse checks with a rubber stamp.

True

A receipt called a petty cash voucher should be prepared for every payment from the petty cash fund.

True

A special form of receipt showing the name of the payee, the purpose of the payment, and the account to be charged for each petty cash payment is known as a petty cash voucher.

True

Businesses commonly use cash registers with tapes that accumulate a record of the day's cash receipts.

True

Every person authorized to sign checks for a business must complete and sign a signature card for the bank.

True

It is good business policy that all cash and cash items received be deposited daily in a bank.

True

On any given day, it is unlikely that the balance in the cash account on the depositor's general ledger (or books) will be the same as the bank balance. T/F

True

Once an entry is made to establish a change fund, no other entries are made to this account.

True

Outstanding checks are checks issued that have not yet been presented to the bank for payment.

True

Payments from the petty cash fund should not be made without obtaining some sort of receipt in return.

True

The check written to establish the petty cash fund is recorded in the journal by crediting Cash and debiting Petty Cash.

True

The key documents and forms required in opening and using a checking account are the signature card, deposit tickets, checks, and bank statements.

True

The person directed to receive the money indicated by a check is known as the payee.

True

The term "cash" has several different meanings. T/F

True

To a business, cash includes currency, coins, checks, money in the checking accounts, money orders, and bank cashier's checks.

True

To establish a change fund, Cash should be credited and Change Fund should be debited.

True

To use an ATM machine, the depositor must have a a.PIN number. b.BIN number. c.Bank number. d.TIN number.

A

A check is a document ordering the depositor to pay cash from the bank's account.

False