Deck 7: Accounting for Cash

Question 1

A restrictive endorsement makes a check payable to any bearer.

Answer 1

False

Question 2

Match the terms with the definitions.a.account form of balance sheet
b.accounting cycle
c.classified balance sheet
d.closing process
e.current assets
f.current liabilities
g.Income Summary
h.long-term liabilities
i.operating cycle
j.permanent accounts
k.post-closing trial balance
l.property, plant, and equipment
m.report form of balance sheet
n.temporary accounts
The person directed to receive the money indicated by a check is known as the payee.

Answer 2

True

Question 3

Match the terms with the definitions.a.account form of balance sheet
b.accounting cycle
c.classified balance sheet
d.closing process
e.current assets
f.current liabilities
g.Income Summary
h.long-term liabilities
i.operating cycle
j.permanent accounts
k.post-closing trial balance
l.property, plant, and equipment
m.report form of balance sheet
n.temporary accounts
The term "cash" has several different meanings.

Answer 3

True

Question 4

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

Question 5

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

Question 6

Match the terms with the definitions.a.account form of balance sheet
b.accounting cycle
c.classified balance sheet
d.closing process
e.current assets
f.current liabilities
g.Income Summary
h.long-term liabilities
i.operating cycle
j.permanent accounts
k.post-closing trial balance
l.property, plant, and equipment
m.report form of balance sheet
n.temporary accounts
Every person authorized to sign checks for a business must complete and sign a signature card for the bank.

Question 7

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

Question 8

A depositor may endorse checks with a rubber stamp.

Question 9

Match the terms with the definitions.a.account form of balance sheet
b.accounting cycle
c.classified balance sheet
d.closing process
e.current assets
f.current liabilities
g.Income Summary
h.long-term liabilities
i.operating cycle
j.permanent accounts
k.post-closing trial balance
l.property, plant, and equipment
m.report form of balance sheet
n.temporary accounts
A depositor is not responsible or liable to the bank for items deposited that are not honored when presented for payment.

Question 10

Match the terms with the definitions.a.account form of balance sheet
b.accounting cycle
c.classified balance sheet
d.closing process
e.current assets
f.current liabilities
g.Income Summary
h.long-term liabilities
i.operating cycle
j.permanent accounts
k.post-closing trial balance
l.property, plant, and equipment
m.report form of balance sheet
n.temporary accounts
It is good business policy that all cash and cash items received be deposited daily in a bank.

Question 11

Match the terms with the definitions.a.account form of balance sheet
b.accounting cycle
c.classified balance sheet
d.closing process
e.current assets
f.current liabilities
g.Income Summary
h.long-term liabilities
i.operating cycle
j.permanent accounts
k.post-closing trial balance
l.property, plant, and equipment
m.report form of balance sheet
n.temporary accounts
The depositor who orders the bank to pay a certain amount of money is known as the drawee.

Question 12

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

Question 13

Match the terms with the definitions.a.account form of balance sheet
b.accounting cycle
c.classified balance sheet
d.closing process
e.current assets
f.current liabilities
g.Income Summary
h.long-term liabilities
i.operating cycle
j.permanent accounts
k.post-closing trial balance
l.property, plant, and equipment
m.report form of balance sheet
n.temporary accounts
The bank in which the depositor has money on deposit is known as the drawer.

Question 14

Match the terms with the definitions.a.account form of balance sheet
b.accounting cycle
c.classified balance sheet
d.closing process
e.current assets
f.current liabilities
g.Income Summary
h.long-term liabilities
i.operating cycle
j.permanent accounts
k.post-closing trial balance
l.property, plant, and equipment
m.report form of balance sheet
n.temporary accounts
The key documents and forms required in opening and using a checking account are the signature card, deposit tickets, checks, and bank statements.

Question 15

Match the terms with the definitions.a.account form of balance sheet
b.accounting cycle
c.classified balance sheet
d.closing process
e.current assets
f.current liabilities
g.Income Summary
h.long-term liabilities
i.operating cycle
j.permanent accounts
k.post-closing trial balance
l.property, plant, and equipment
m.report form of balance sheet
n.temporary accounts
Cash usually means only currency and coins.

Question 16

Match the terms with the definitions.a.account form of balance sheet
b.accounting cycle
c.classified balance sheet
d.closing process
e.current assets
f.current liabilities
g.Income Summary
h.long-term liabilities
i.operating cycle
j.permanent accounts
k.post-closing trial balance
l.property, plant, and equipment
m.report form of balance sheet
n.temporary accounts
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.

Question 17

Match the terms with the definitions.a.account form of balance sheet
b.accounting cycle
c.classified balance sheet
d.closing process
e.current assets
f.current liabilities
g.Income Summary
h.long-term liabilities
i.operating cycle
j.permanent accounts
k.post-closing trial balance
l.property, plant, and equipment
m.report form of balance sheet
n.temporary accounts
A restrictive endorsement means that the check is payable to any bearer.

Question 18

Match the terms with the definitions.a.account form of balance sheet
b.accounting cycle
c.classified balance sheet
d.closing process
e.current assets
f.current liabilities
g.Income Summary
h.long-term liabilities
i.operating cycle
j.permanent accounts
k.post-closing trial balance
l.property, plant, and equipment
m.report form of balance sheet
n.temporary accounts
On a deposit ticket, checks should be listed in numerical order.

Question 19

Match the terms with the definitions.a.account form of balance sheet
b.accounting cycle
c.classified balance sheet
d.closing process
e.current assets
f.current liabilities
g.Income Summary
h.long-term liabilities
i.operating cycle
j.permanent accounts
k.post-closing trial balance
l.property, plant, and equipment
m.report form of balance sheet
n.temporary accounts
To a business, cash includes currency, coins, checks, money in the checking accounts, money orders, and bank cashier's checks.

Question 20

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

Question 21

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

Question 22

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

Question 23

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

Question 24

Each check should be identified by its

A) AAB number.
B) MBA number.
C) CPA number.
D) ABA number.

Question 25

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

Question 26

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.

Question 27

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

Question 28

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.

Question 29

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

Question 30

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

Question 31

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

Question 32

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

Question 33

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

Question 34

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

Question 35

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

Question 36

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

Question 37

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.

Question 38

Posting must be done from the petty cash payments record.

Question 39

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

Question 40

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

Question 41

To sign the back of a check with the name of the company and "Pay to any bank" is an example of a

A) restrictive endorsement.
B) signature card.
C) blank endorsement.
D) canceled check.

Question 42

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) NSF checks.
B) outstanding checks.
C) deposits in transit.
D) dishonored checks.

Question 43

If, in the effort to prove cash, a shortage is found, the amount is treated as a(n)

A) cash receipts transaction.
B) petty cash transaction.
C) revenue earned transaction.
D) expense.

Question 44

On a bank reconciliation, deposits that were not entered by the bank before the bank statement was prepared are known as

A) NSF deposits.
B) restrictive deposits.
C) deposits in transit.
D) unrecorded deposits.

Question 45

A debit to Accounts Receivable for $50 and a credit to Cash for $50 would be an accurate journal entry to record

A) electronic funds transfers (EFTs).
B) not sufficient funds (NSF) checks.
C) petty cash.
D) ATM deposits.

Question 46

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 Cash and crediting Miscellaneous Expense.
B) debiting Cash and crediting Owner's Capital.
C) debiting Accounts Payable and crediting Cash.
D) debiting Miscellaneous Expense and crediting Cash.

Question 47

A check involves three parties. The bank in which the drawer has money on deposit is called the

A) drawer.
B) drawee.
C) payee.
D) endorser.

Question 48

To reconcile the bank statement, which of the following amounts would be subtracted from the checkbook balance?

A) service charge
B) outstanding checks
C) deposits in transit
D) amounts collected by the bank for the depositor's account

Question 49

The bank statement for a checking account normally shows the

A) amounts of deposits to be made.
B) amount of deposits and other credits added during the period.
C) checks written but not yet cashed.
D) amounts to be collected by the bank for the depositor's account.

Question 50

A check involves three parties. The person directed to receive the money is called the

A) drawer.
B) drawee.
C) payee.
D) endorser.

Question 51

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) $3.
B) $17.
C) $180.
D) $183.

Question 52

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 voucher.
B) petty cash check.
C) petty cash document.
D) petty cash register.

Question 53

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 Interest Earned and crediting Cash.
B) debiting Interest Expense and crediting Cash.
C) debiting Cash and crediting Interest Earned.
D) debiting Cash and crediting Interest Expense.

Question 54

To use an ATM machine, the depositor must have a

A) Bank number.
B) PIN number.
C) BIN number.
D) TIN number.

Question 55

The process of bringing the book and the bank balance into agreement is called

A) reconciling the bank statement.
B) proving the cash.
C) preparing a statement of payment.
D) preparing a statement of disbursements.

Question 56

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) restrictive endorsement.
B) dishonored endorsement.
C) regular endorsement.
D) blank endorsement.

Question 57

To reconcile the bank statement, which of the following amounts would be subtracted from the checkbook balance?

A) service charge
B) outstanding checks
C) deposits in transit
D) amounts collected by the bank for the depositor's account

Question 58

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) $38.
B) $5.
C) $11.
D) $43.

Question 59

A check involves three parties. The person who orders the bank to pay a certain amount of money is called the

A) drawer.
B) drawee.
C) payee.
D) endorser.

Question 60

To reconcile the bank statement, which of the following amounts would be subtracted from the bank statement balance?

A) service charge
B) outstanding checks
C) deposits in transit
D) amounts collected by the bank for the depositor's account

Question 61

Match the terms with the definitions.a.restrictive endorsement
b.bank reconciliation
c.bank statement
d.blank endorsement
e.canceled checks
f.petty cash fund
g.payee
h.check
i.check stub
j.petty cash payments record
k.NSF checks
l.deposit ticket
m.deposits in transit
n.drawee
o.drawer
p.electronic funds transfer
q.endorsement
r.magnetic ink character recognition code
A statement of account issued by a bank to each depositor once a month.

Question 62

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) increase the bank statement balance
B) increase the book balance
C) decrease the bank statement balance
D) decrease the book balance

Question 63

Match the terms with the definitions.a.restrictive endorsement
b.bank reconciliation
c.bank statement
d.blank endorsement
e.canceled checks
f.petty cash fund
g.payee
h.check
i.check stub
j.petty cash payments record
k.NSF checks
l.deposit ticket
m.deposits in transit
n.drawee
o.drawer
p.electronic funds transfer
q.endorsement
r.magnetic ink character recognition code
The depositor's checks paid by the bank during the bank statement period.

Question 64

The balance in the checking account of York Company as of July 31 is $5,852.16. The bank statement shows an ending balance of $4,870.00. The following information is discovered by comparing checks deposited and written and noting service charges and other debit and credit memos shown on the bank statement. Required:
Determine the ending balances to reconcile the bank statement and checkbook.

Question 65

Match the terms with the definitions.a.restrictive endorsement
b.bank reconciliation
c.bank statement
d.blank endorsement
e.canceled checks
f.petty cash fund
g.payee
h.check
i.check stub
j.petty cash payments record
k.NSF checks
l.deposit ticket
m.deposits in transit
n.drawee
o.drawer
p.electronic funds transfer
q.endorsement
r.magnetic ink character recognition code
A report used to bring the book and bank balances into agreement.

Question 66

Match the terms with the definitions.a.restrictive endorsement
b.bank reconciliation
c.bank statement
d.blank endorsement
e.canceled checks
f.petty cash fund
g.payee
h.check
i.check stub
j.petty cash payments record
k.NSF checks
l.deposit ticket
m.deposits in transit
n.drawee
o.drawer
p.electronic funds transfer
q.endorsement
r.magnetic ink character recognition code
The bank on which the check is drawn.

Question 67

To reconcile the bank statement, which of the following amounts would be added to the bank statement balance?

A) service charge
B) outstanding checks
C) deposits in transit
D) amounts collected by the bank for the depositor's account

Question 68

Match the terms with the definitions.a.restrictive endorsement
b.bank reconciliation
c.bank statement
d.blank endorsement
e.canceled checks
f.petty cash fund
g.payee
h.check
i.check stub
j.petty cash payments record
k.NSF checks
l.deposit ticket
m.deposits in transit
n.drawee
o.drawer
p.electronic funds transfer
q.endorsement
r.magnetic ink character recognition code
The person being paid the cash.

Question 69

Match the terms with the definitions.a.restrictive endorsement
b.bank reconciliation
c.bank statement
d.blank endorsement
e.canceled checks
f.petty cash fund
g.payee
h.check
i.check stub
j.petty cash payments record
k.NSF checks
l.deposit ticket
m.deposits in transit
n.drawee
o.drawer
p.electronic funds transfer
q.endorsement
r.magnetic ink character recognition code
Deposits that have not reached or been recorded by the bank before the bank statement is prepared.

Question 70

A special multi-column record that supplements the regular accounting records and from which no posting is done is called a

A) bank reconciliation form.
B) petty cash payment record.
C) journal.
D) ledger.

Question 71

To complete transactions with the bank, electronic funds transfer (EFT) systems use

A) a computer.
B) checks.
C) currency.
D) drafts or money orders.

Question 72

Match the terms with the definitions.a.restrictive endorsement
b.bank reconciliation
c.bank statement
d.blank endorsement
e.canceled checks
f.petty cash fund
g.payee
h.check
i.check stub
j.petty cash payments record
k.NSF checks
l.deposit ticket
m.deposits in transit
n.drawee
o.drawer
p.electronic funds transfer
q.endorsement
r.magnetic ink character recognition code
A form showing a detailed listing of items being deposited.

Question 73

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 $982, Cash Short and Over for $2; credit Revenues for $984
C) debit Cash Short and Over for $2; credit Miscellaneous Expense $2
D) debit Cash for $884; credit Revenues for $882, and Cash Short and Over for $2

Question 74

The check written to establish the petty cash fund is entered in the journal by

A) debiting Cash and crediting Petty Cash.
B) debiting Petty Cash and crediting Owner's Capital.
C) debiting Owner's Capital and crediting Petty Cash.
D) debiting Petty Cash and crediting Cash.

Question 75

Match the terms with the definitions.a.restrictive endorsement
b.bank reconciliation
c.bank statement
d.blank endorsement
e.canceled checks
f.petty cash fund
g.payee
h.check
i.check stub
j.petty cash payments record
k.NSF checks
l.deposit ticket
m.deposits in transit
n.drawee
o.drawer
p.electronic funds transfer
q.endorsement
r.magnetic ink character recognition code
In some checkbooks, a document attached to a check that contains space for relevant information about the check.

Question 76

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) $173.
B) $170.
C) $27.
D) $0.

Question 77

Match the terms with the definitions.a.restrictive endorsement
b.bank reconciliation
c.bank statement
d.blank endorsement
e.canceled checks
f.petty cash fund
g.payee
h.check
i.check stub
j.petty cash payments record
k.NSF checks
l.deposit ticket
m.deposits in transit
n.drawee
o.drawer
p.electronic funds transfer
q.endorsement
r.magnetic ink character recognition code
A process using a computer rather than paper checks to complete transactions with the bank.

Question 78

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) $1,490.
B) $1,205.
C) $1,190.
D) $1,505.

Question 79

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 Automobile Expense.
B) crediting Supplies Expense.
C) debiting Cash.
D) crediting Accounts Payable.

Question 80

Match the terms with the definitions.a.restrictive endorsement
b.bank reconciliation
c.bank statement
d.blank endorsement
e.canceled checks
f.petty cash fund
g.payee
h.check
i.check stub
j.petty cash payments record
k.NSF checks
l.deposit ticket
m.deposits in transit
n.drawee
o.drawer
p.electronic funds transfer
q.endorsement
r.magnetic ink character recognition code
A fund established to pay for small items with cash.