acct chap 6

The ABA code (American Bankers Association) is found:

In the upper-right corner of each check

A nonsufficient funds check was returned to your company. How does the bank treat this on your bank statement?

It is shown as a debit memo.

Which of the following would be subtracted from the balance per the bank?

Outstanding checks

The debit recorded in the journal entry to establish the petty cash fund is to:

Petty cash

The entry to replenish the petty cash fund debited delivery expense for $50 and postage for $75 however, both expenditures were for delivery. This would cause:

Postage expense to be overstated When replenishing petty cash, expenses for expenditures from petty cash are recognized. By debiting postage instead of delivery expenses, postage was overstated.

In preparing a bank reconciliation, a manager compares the deposits listed on the bank statement to those shown in the checkbook. Which of the following is the manager doing?

Preparing a list of deposits in transit

Jim Rodgers is the treasurer of ABC Inc. He receives a check from a customer and endorses it as follows: Pay to the order of Giant Bank for deposit only. ABC Inc. What type of endorsement has Jim executed?

RESTRICTIVE

An error, on the company's books, in recording a $102 deposit as $201 would be included on the bank reconciliation as a(n):

Subtraction of $99 to the balance per books If there was an error in recording a $102 deposit as $201, the difference must be subtracted from the books balance in order to reconcile.

U.S. National Banking sends a credit memorandum of $14,975 to Pan Servings Inc., verifying the increase in the company's balance. What is a plausible explanation of this?

The bank acts as a collecting agent for Pan Servings and collected a $15,000 note and deducted a charge a $25 fee for the service with the net amount collected and added to the bank balance.

A manager is reconciling the checking account and has noted that $12,000 of checks are still outstanding checks. Which of the following is true?

The checks have not been presented for payment even though they have been deducted from the checkbook Outstanding checks have not been presented to the bank for payment, but have been subtracted in the checkbook. Outstanding checks are checks written by a company or person that were not received or not processed by the bank before the preparation of the bank statement.

A manager is reconciling the checking account and has noted that $15,000 of checks are still outstanding checks and that the checking account balance per his check book is $10,000 but the bank statement shows a $24,750 balance. Which of the following is true?

The checks have not been presented for payment even though they have been deducted from the checkbook and therefore most of the difference is attributed to that

The drawee is:

The name of the bank upon which a check is written,

A bank service charge of $10 would be included on the bank reconciliation as a(n):

$10 subtraction from the balance per books

An accountant is reviewing the work of a bookkeeper who just completed a bank reconciliation and sees that $15 was deducted from the balance per the books. Which of the following would explain that?

A $15 bank service charge disclosed in the bank statement

Which of the following would be a reason for a debit memo appearing in a bank statement?

A nonsufficient funds check was returned to your company

An error, on the company's books, in recording a $92 deposit as $29 would be included on the bank reconciliation as a(n):

Addition of $63 to the balance per books

The action that transfers the right to deposit or transfer a check by signing the back of the check is called:

An endorsement

Jim Rogers endorsed a check by signing his name on the back of the left side of the check. This kind of endorsement is called:

Blank endorsement

The credit recorded in the journal entry to establish the petty cash fund is to:

Cash

The ABA code on a check tells you the:

City or state of the bank The ABA code which is found in the upper-right corner of each check identifies the large city or state in which the bank is located and identifies the bank, the federal reserve bank district, and the routing number used by the Federal Reserve Bank.

The entry to replenish the petty cash fund debited delivery expense for $70 and cleaning expenses for $80 however, both expenditures were for delivery. This would cause:

Cleaning expense to be overstated

First City National bank issue a $5,000 credit memorandum to Mac's Auto Service Centers of America when the bank:

Collected a note receivable from a customer

A $200 petty cash fund has cash of $50 and valid receipts for $150. The entry to replenish the fund would include a:

Credit to cash for $150 A $200 petty cash fund has cash of $50 and valid receipts for $150. The entry to replenish the fund would include a credit to cash for $150. The credit to cash allows the clerk to draw a check for $150 to put money back in the petty cash box.

A $200 petty cash fund has cash of $20 and valid receipts for $180. The entry to replenish the fund would include a:

Credit to cash for $180

Which of the following would be the accounting entry for a bank service charge that is disclosed on the bank statement?

Debit bank service charges; credit cash

A customer pays with a credit card upon the purchase of a $2,000 item. The credit card company charges a 1.5% service charge. Which of the following entries would record properly the sale?

Debit cash $1,970; debit service charge $30; credit sales $2,000

A customer pays with a credit card upon the purchase of a $500 item. The credit card company charges a 1.5% service charge. Which of the following entries would record properly the sale?

Debit cash $492; debit service charge $7.50; credit sales $500 A credit card sale is a cash sale but the service charge needs to be deducted and recognized as an expense.

Which of the following is the proper accounting entries to record interest credited to a checking account as disclosed on a bank statement?

Debit cash; credit interest income Interest credited to a checking account is a type of revenue (interest income) and an increase in cash.

A company is setting up a fund that will be used to make small dollar amount cash purchases of office supplies from time-to-time. Which of the following entries would establish a $250 cash fund?

Debit petty cash $250

Giant Sports Inc.'s $500 petty cash fund has a shortage of $16. The facts are: $180 in valid receipts for expenses; $304 in coins and currency. The journal entry to replenish the petty cash fund would include a:

Debit to cash short and over for $16

The entry establishing a $300 petty cash fund would include a:

Debit to petty cash for $300 The entry establishing a $300 petty cash fund would include a $300 debit to petty cash and a $300 credit to cash.

If the owner of Office Coffee Services forgot to deduct a withdrawal from the balance per books, what entry would be necessary?

Debit withdrawals; credit cash

If the owner of business withdrawals money for personal use but in performing a bank reconciliation determines that she had neglected to record the withdrawal what accounting entry would be necessary?

Debit withdrawals; credit cash

A voucher would be used for:

Documentation to support a petty cash expenditure

A requirement that all checks written have proper authorization and ______ is an example of an internal control _______.

Documentation; procedure

An employee who is responsible for managing the petty cash completes a form that contains the following information: date, amount, who was paid, purpose, and an authorization signature. What is the name of that form?

Petty Cash Voucher

Which of the following statements is false?

The statement shows outstanding checks

How would outstanding checks be handled when reconciling the ending cash balance per the bank statement to the correct adjusted cash balance?

They would be subtracted from the balance per the bank.

Bank interest earned on a checking account would be shown on a bank reconciliation as:

added to the balance per books.

An example of an internal control over cash is:

all checks written are prenumbered., the use of a bank account., all checks written must have proper authorization and documentation.

The replenishment of the petty cash fund was recorded twice. This would cause:

expenses to be overstated.

The bank statement does NOT show:

outstanding checks.

The credit recorded in the journal entry to establish the petty cash fund is to:

to pay for small expenses.