Chapter 6

Which of the statements below describe the goals and principles of cash management? (Check all that apply.) Multiple select question.

Plan cash receipts to meet cash payments when due. Encourage quick collection of receivables. Keep a minimum level of cash necessary to operate. Money should be spent only when it is available.

Recall the preparation of a bank reconciliation by selecting the correct items below. (Check all that apply.)

Subtract any outstanding checks from the balance per bank. Compute the adjusted book balance. Add deposits in transit to the balance per bank. Compute the adjusted bank balance.

In addition to the cashier and clerk who have access to the cash a third employee should have access to

the records for cash, but not the actual cash

Determine which of the items below would appear in the Deposits column of a bank statement and would cause an increase in the account's balance. (Check all that apply.)

A note collected by the bank on behalf of the account owner Interest paid by the bank on the bank account balance Deposits made during the month

Contrast how a depositor's account is classified by a bank compared to how it is classified by the account owner by completing the following sentence. A depositor's account is a(n) assetBlank 1Blank 1 asset , Incorrect Unavailable (liability/asset/expense) on the bank's records, but it is a(n) exspenseBlank 2Blank 2 exspense , Incorrect Unavailable(liability/asset/expense) on the books of the account owner. Because of this, every time the account owner makes a deposit, the bank debitsBlank 3Blank 3 debits , Incorrect Unavailable (debits/credits) the account owner's account.

Blank 1: liability Blank 2: asset Blank 3: credits

Identify the examples of good internal control designed to protect over-the-counter cash receipts. (Check all that apply.)

Clerks should be required to give the customer a receipt for each sale. The clerk and the cashier have access to cash, but not to the accounting records.

ackson Co. needs to replenish its petty cash fund. Currently, it contains $5 in cash and receipts for supplies of $40 and delivery expenses of $49. The fund was initially established with $100. Demonstrate the journal entry to replenish the account and recognize the cash shortage by choosing the correct actions from those given below. (Check all that apply.)

Delivery Expense is debited for $49. Supplies Expense is debited for $40. Cash Over and Short is debited for $6. Cash is credited for $95.

Jackson Co. needs to replenish its petty cash fund. Currently, it contains $11 in cash and receipts for supplies of $40 and delivery expenses of $49. The fund was initially established with $100. Demonstrate the journal entry to replenish the account by choosing the correct actions from those below. (Check all that apply.) Multiple select question.

Delivery Expense is debited for $49. Supplies Expense is debited for $40. Cash is credited for $89.

Determine which of the items below would appear in the Deposits column of a bank statement and would cause an increase in the account's balance. (Check all that apply.)

Deposits made during the month Interest paid by the bank on the bank account balance A note collected by the bank on behalf of the account owner

Determine which of the statements below accurately describe services provided by a bank. (Check all that apply.)

Each bank deposit is supported by a deposit ticket. To withdraw money from an account, the depositor can use a check. A bank account is a record set up by a bank for a customer.

Determine which of the statement(s) are correct if a Petty Cash account is not replenished at the end of the accounting period. (Check all that apply.)

Expenses would not be recorded in the period in which they were incurred. The income statement would reflect a net income amount that was too high. The balance sheet would show an overstated cash asset.

Identify the basic internal control guidelines which should be in place to protect a business's cash by selecting the correct answers below. (Check all that apply.)

Handling cash is separate from recordkeeping of cash. Cash payments are made by check. Cash receipts are promptly deposited in a bank.

Identify the basic internal control guidelines which should be in place to protect a business's cash by selecting the correct answers below. (Check all that apply.)

Handling cash is separate from recordkeeping of cash. Cash receipts are promptly deposited in a bank. Cash payments are made by check.

Choose the items below that would be added to the book balance on a bank reconciliation. (Check all that apply.)

Interest earned on the depositor's account Note collected by the bank for the depositor

Which of the answers below correctly describe the Cash Over and Short account? (Check all that apply.)

It is an income statement account. A debit balance reflects an expense. It records the effects of cash overages and cash shortages.

Review the following statements and select the ones which accurately describe a Petty Cash fund. Select all answers which apply.

It is established to pay for small payments like low-cost supplies and shipping fees, etc. It is an asset reported on the balance sheet.

Select the items below that would cause the bank statement balance to differ from the depositor's book balance.

NSF check, Deposit in transit, interest paid by bank

A cash register tape reflected total sales equaling $100, but the cash in the cash register drawer equaled $105. Review the statements below and determine which is correct regarding this discrepancy. (Check all that apply.)

The Cash account will be debited for $105. The Cash Over and Short account will be credited for $5. The Sales account will be credited for $100. The extra $5 collected will be treated as a miscellaneous revenue.

Determine which of the statements below is correct regarding information reflected on a monthly bank statement.

The information on the bank statement reflects the bank's records of the depositor's account.

Given the choices below, choose the examples of internal controls designed to control cash payments (Check all that apply.)

Use of a voucher system. All payments should be made by check. Use of a petty cash system. Only authorized individuals should be allowed to sign checks.

Determine which of the statements below are accurate regarding how a petty cash fund is created and used in a business. (Check all that apply.)

he petty cashier is responsible for keeping the cash in the fund safe. The petty cashier is responsible for making payments from the petty cash fund. A check is drawn by the company cashier to establish the petty cash fund. The sum of all petty cash receipts plus the remaining cash should equal the total of the fund amount at any given time.