Chapter 7- Accounting for Cash Study Plan

What is the process called when the depositor receives the bank statement and examines the business records to identify the difference between the book and bank balances?

A bank reconciliation

Which of the following documents is a business form ordering a bank to pay cash from a depositor's account?

A check

What is a canceled check?

A check that has been paid by the bank

A journal entry that would result in a deduction from the cash balance is required for which of the following bank reconciliation items?

An unrecorded ATM withdrawal

Which of the following is not an example of an internal control procedure for cash?

Both the handling and recording of cash should be done by one employee.

The register tapes for Country Gourmet Shop on June 5 showed cash receipts of $1,243, and a change fund of $200 was maintained. However, $1,446 was in the register drawer. Which of the following journal entries would be made for Cash, Service Fees, and Cash Short and Over on June 5?

Debit Cash for $1,246, credit Cash Short and Over for $3, and credit Service Fees for $1,243

The register tapes for March 20 showed cash receipts of $872, and a change fund of $200 was maintained, but only $1,070 in cash was in the register drawer. Which of the following journal entries would be made for Cash, Service Fees, and Cash Short and Over on March 20?

Debit Cash for $870, debit Cash Short and Over for $2, and credit Service Fees for $872

A $150 ATM withdrawal was deducted by the bank out of Costa Painting Company's checking account. However, Costa Painting Company has not recorded the withdrawal of cash by the owner for personal use. Which of the following journal entries is required to correct this oversight?

Debit Chris Costa, Drawing for $150 and credit Cash for $150

According to the monthly bank statement, bank service charges were deducted by the bank from the business checking account. However, $25 must be deducted from the checkbook balance and which of the following journal entries must be recorded?

Debit Miscellaneous Expense for $25 and credit Cash for $25

On January 1, Java Juice Café established a petty cash fund for $100. To fund the account with cash, a company check was written to the custodian. The custodian cashed the check and placed the money in the petty cash box. Which of the following is the correct entry to establish the petty cash fund on January 1?

Debit Petty Cash for $100 and credit Cash for $100

Which of the following is an example of a journal entry to record the replenishment of the petty cash fund?

Debit Postage Expense for $7.80, debit Vehicle Expense for $36.50, and credit Cash for $44.30

Based on the following information for the month of October, consider the weekly entries for cash receipts from service fees and cash short and over. A change fund of $200 is maintained. What is the ending balance of Cash Short and Over, and does this balance represent an expense or revenue?

Debit balance in Cash Short and Over of $3.00 (expense)

Based on the following information from Glorious Tours, consider the weekly entries for cash receipts from service fees and cash short and over for the month of June. A change fund of $100 is maintained. What is the ending balance of Cash Short and Over, and does this balance represent an expense or revenue?

Debit balance in Cash Short and Over of $5.50 (expense)

Which of the following does the banking process EFT stand for?

Electronic funds transfer

Which of the following is not a step in preparing a bank reconciliation?

Identify ending balance of previous statement.

Who should be able to access the petty cash fund at any given time?

The custodian

To a business, cash is an asset that includes

currency, coins, money in checking accounts, checks, and money orders.

The two times an entry would be made that affects the change fund would be when

establishing a change fund and if the amount of the fund is being changed

At the end of the accounting period, a credit balance in the cash short and over account represents a(n)

overage (revenue)

The form prepared for every payment from the petty cash fund is called a

petty cash voucher.

At the end of the period, a debit balance in the cash short and over account is representative of a(n)

shortage (expense).

The petty cash fund is replenished

whenever it runs low and at the end of each accounting period.