Deck 9: Cash Receipts, Cash Payments, and Banking Procedures

Question 1

The entry to replenish petty cash includes a debit to Petty Cash Fund and a credit to Cash.

Answer 1

False

Question 2

If the amount of cash available for deposit is ____________________ than the amount listed on the audit tape taken from the cash register, the Cash Short or Over account is debited.

Answer 2

less

Question 3

Amounts that appear in the Other Accounts Credit section of the cash receipts journal require individual posting to the general ledger.

Answer 3

True

Question 4

The entry to record the issuance of a check in settlement of an interest-bearing promissory note includes a debit to Notes Payable, a debit to ____________________, and a credit to Cash.

Question 5

Cash Short or Over is an expense account when it has a debit balance.

Question 6

The individual amounts in the Sales Credit column of the cash receipts journal are posted to the accounts receivable subsidiary ledger.

Question 7

If cash is over, it is entered in the Other Account Credit column of the cash receipts journal and the figure is circled.

Question 8

In a firm that has a good system of internal control, cash receipts are deposited often.

Question 9

Purchases Discounts is a contra cost of goods sold account.

Question 10

A strong system of internal control requires that all payments be made by check except those made from a carefully controlled cash fund such as a petty cash fund.

Question 11

The monthly bank statement should be received and reconciled by the employee who deposits cash receipts and writes the checks.

Question 12

After a multicolumn special journal such as a cash receipts journal is totaled, it should be proved to be sure that the debits and credits in the journal are equal.

Question 13

No end-of-month posting is required for the total of the Other Accounts Debit column of the cash payments journal.

Question 14

Grouping all transactions involving cash payments together in the cash payments journal strengthens the audit trail.

Question 15

Bank Reconciliations are not that important because banks never make errors.

Question 16

To arrive at the accurate balance on a bank reconciliation statement, it is necessary to deduct an NSF check from the bank statement balance.

Question 17

To record payment of sales tax owed, the accountant would debit ____________________ and credit Cash.

Question 18

The individual amounts in the Accounts Payable Debit column of the cash payments journal are posted to the accounts payable subsidiary ledger.

Question 19

A(n) ____________________ is a written promise to pay a specified amount of money at a specified time.

Question 20

A check that has a full endorsement can be further endorsed by any bearer and therefore, is not as safe as a check with a blank endorsement.

Question 21

To record the payment of a purchase invoice when a cash discount is taken, the accountant would

A) debit Accounts Payable, credit Purchases Discounts, and credit Cash.
B) debit Accounts Payable, debit Purchases Discounts, and credit Cash.
C) debit Accounts Payable and credit Cash.
D) debit Purchases, credit Purchases Discounts, and credit Cash.

Question 22

A(n) ____________________ is a form received from the bank showing all transactions recorded in the depositor's account during the month.

Question 23

Upon collection of the amount due on an interest-bearing promissory note from a customer, the accountant would debit Cash, credit Notes Receivable, and

A) debit Interest Expense.
B) credit Interest Income.
C) credit Interest Expense.
D) debit Interest Income.

Question 24

To transfer ownership of a check from one party to another, it is necessary to ____________________ the check.

Question 25

The Petty Cash Fund account has a(n) ____________________ balance.

Question 26

On a bank reconciliation statement, you would find all of the following except

A) a list of canceled checks.
B) a list of NSF checks.
C) a list of outstanding checks.
D) the bank service charge.

Question 27

Which of the following statements is not correct?

A) In accounting, the term "cash" includes checks, money orders, and funds on deposit in a bank as well as currency and coins.
B) The cash register proof is used to enter the cash sales and sales tax in the cash receipts journal.
C) The entry to record the receipt of a promissory note to replace an open account is recorded in the cash receipts journal.
D) The cash receipts journal has separate columns for debits to Cash, credits to Accounts Receivable, and credits to Sales and Sales Tax Payable.

Question 28

If a firm's bank reconciliation statement shows a bank statement balance of $12,000, total deposits in transit of $1,500, and total outstanding checks of $1,000, the adjusted bank balance is ____________________.

Question 29

Which of the following statements is correct?

A) The entry to record the payment of an invoice within the cash discount period would include a debit to the Purchases Discounts account.
B) To record a cash purchase of merchandise, the accountant would debit Purchases and credit Cash.
C) A transaction that is properly recorded in the cash payments journal will always include the recording of an amount in the Cash Debit column.
D) Purchase discounts is a contra revenue account.

Question 30

A(n) ____________________ check is a check dated some time in the future.

Question 31

Checks issued by a firm and entered in its records that have not been paid by the bank are called ____________________ checks.

Question 32

A cash sale of merchandise would be recorded in

A) the sales journal.
B) the general journal.
C) the cash receipts journal.
D) the cash payments journal.

Question 33

Checks issued by a firm that were paid by the bank and returned to the firm with the bank statement are called ____________________ checks.

Question 34

The person or firm that issues a check is called the ____________________, or payer.

Question 35

When a bank deducts any amount other than a paid check from a depositor's account, it issues a form called a(n) ____________________ memorandum.

Question 36

The most appropriate form of endorsement of a check for business purposes is

A) the blank endorsement.
B) the restrictive endorsement.
C) the full endorsement.
D) no endorsement.

Question 37

The entry to replenish a petty cash fund includes

A) a debit to Cash and a credit to Petty Cash.
B) a debit to Petty Cash Fund and a credit to Cash.
C) debits to various expense accounts and a credit to Petty Cash Fund.
D) debits to various expense accounts and a credit to Cash.

Question 38

If a payee indicates, as part of the endorsement, the name of the person, firm, or bank to whom the check is to be payable, the payee has made a(n) ____________________ endorsement.

Question 39

The entry to record an additional cash investment by the owner is recorded in

A) the cash payments journal.
B) the cash receipts journal.
C) the general journal.
D) the purchases journal.

Question 40

The process of determining why a difference exists between a firm's records and the bank's records and bringing the two sets of records into balance is known as ____________________ the bank statement.

Question 41

To arrive at an accurate balance on a bank reconciliation statement, a service charge should be

A) added to the bank statement balance.
B) added to the book balance.
C) deducted from the bank statement balance.
D) deducted from the book balance.

Question 42

A firm's bank reconciliation statement shows a book balance of $15,820, an NSF check of $400, and a service charge of $20. Its adjusted book balance is

A) $16,240.
B) $15,400.
C) $15,440.
D) $16,200.

Question 43

To arrive at an accurate balance on a bank reconciliation statement, outstanding checks should be

A) added to the bank statement balance.
B) added to the book balance.
C) deducted from the bank statement balance.
D) deducted from the book balance.

Question 44

Merchandise is sold for $8,820, terms 1/10, n/30. Prior to payment, the customer returned $560 of the merchandise. If the invoice is paid within the discount period the amount of the sales discount is:

A) $82.60
B) $165.20
C) $88.20
D) $93.80

Question 45

To arrive at an accurate balance on a bank reconciliation statement, deposits in transit should be

A) added to the bank statement balance.
B) added to the book balance.
C) deducted from the bank statement balance.
D) deducted from the book balance.

Question 46

If a check written by a firm is not canceled by the bank and returned with the month's bank statement, the firm should

A) consider this check as outstanding when preparing the bank reconciliation.
B) immediately notify the bank requesting that it correct its records.
C) adjust the balance in the firm's checkbook to reflect the data that appears in the bank's records.
D) make no adjustment when preparing the bank reconciliation.

Question 47

Included with its bank statement a firm may receive a credit memorandum, which could indicate

A) a bank service charge deducted from the firm's account balance.
B) the bank's return of a dishonored (NSF) check that was issued by a credit customer of the firm.
C) a fee for printing new business checks.
D) an addition to the firm's account balance because the bank collected the amount due on a promissory note from a customer of the firm.

Question 48

To arrive at an accurate balance on a bank reconciliation statement, an error made by the bank in which the bank deducted a check issued by another business from the balance of the company's bank account should be

A) added to the bank statement balance.
B) added to the book balance.
C) deducted from the bank statement balance.
D) deducted from the book balance.

Question 49

A check issued for $1,980 to pay a vendor on account was recorded in the firm's records as $1,890; the canceled check was properly listed on the bank statement at $1,980. To arrive at an accurate balance on a bank reconciliation statement, the error should be

A) added to the bank statement balance.
B) added to the book balance.
C) deducted from the bank statement balance.
D) deducted from the book balance.

Question 50

To arrive at an accurate balance on a bank reconciliation statement, a credit memorandum from the bank for the collection of a note and interest should be

A) added to the bank statement balance.
B) added to the book balance.
C) deducted from the bank statement balance.
D) deducted from the book balance.

Question 51

Merchandise costing $5,600 with terms of 1/10, n/30, with transportation costs of $320 included on the invoice (not included in the $5,600) is sold on account. If the bill is paid within ten days, the amount of the purchase discount is.

A) $59.20.
B) $56.00.
C) $3.20.
D) $52.80

Question 52

To arrive at an accurate balance on a bank reconciliation statement, a debit memorandum for a customer check marked NSF should be

A) added to the bank statement balance.
B) added to the book balance.
C) deducted from the bank statement balance.
D) deducted from the book balance.

Question 53

A firm appropriately wrote a check for $78 but entered the amount as payment of $87 in its records. On a bank reconciliation statement this error would be shown as

A) A deduction of $9 from the book balance.
B) An addition of $9 to the book balance.
C) A deduction of $9 from the bank statement balance.
D) An addition of $9 to the bank statement balance.

Question 54

A firm's bank reconciliation statement shows a book balance of $31,640, an NSF check of $800, and a service charge of $40. Its adjusted book balance is

A) $32,480.
B) $30,800.
C) $30,880.
D) $32,400.

Question 55

A check issued for $890 to pay a vendor on account was recorded in the firm's records as $980; the canceled check was properly listed on the bank statement at $890. To arrive at an accurate balance on a bank reconciliation statement, the error should be

A) added to the bank statement balance.
B) added to the book balance.
C) deducted from the bank statement balance.
D) deducted from the book balance.

Question 56

A check written by Bosley Co. for $168 was mistakenly recorded in the company records as $186. A. Option A.
B) Option B.
C) Option C.
D) Option D.

Question 57

The entry in a firm's accounting records for a credit customer's check that was returned by the bank marked "NSF" would include

A) a debit to Miscellaneous Expense and a credit to Cash.
B) a debit to Accounts Receivable and a credit to Accounts Payable.
C) a debit to Accounts Receivable and a credit to Cash.
D) a debit to Cash and a credit to Accounts Receivable.

Question 58

After a bank reconciliation statement is completed, a firm may have to make an entry in its accounting records for

A) outstanding checks.
B) deposits in transit.
C) the bank statement balance.
D) NSF checks.

Question 59

Beckett Co. sold merchandise on account for $10,600, terms 2/10, n/30. Freight charges of $250 were prepaid by the seller and added to the invoice. The customer returned $800 of merchandise before making the payment then paid the invoice within the discount period. What is the amount Beckett Co. received?

A) $9,854
B) $9,604
C) $9,849
D) $9,833

Question 60

Which of the following would not be shown as an adjustment to the book balance on a bank reconciliation statement?

A) Bank service charges
B) NSF checks
C) Deposits in transit
D) A charge for printing new checks

Question 61

Of the four categories shown in the form above, which category or categories require journal entries in the firm's records?

A) Bank Statement Balance Additions and Bank Statement Balance Deductions
B) Bank Statement Balance Additions and Ledger Balance of Cash Additions
C) Bank Statement Balance Deductions and Ledger Balance of Cash Deductions
D) Ledger Balance of Cash Additions and Ledger Balance of Cash Deductions

Question 62

Read each of the following transactions. Determine the accounts to be debited and credited.

A) Issued a check for $10,600 to pay a $10,000 note plus interest of $600.
B) Issued a check for $1,500 to pay the monthly rent.
C) Issued a check for $7,840 to a creditor on account for an invoice of $8,000 less a cash discount of $160.

Question 63

The cash receipts journal for Arlen Company is shown below. Describe how the amounts would be posted to the general ledger accounts.

Question 64

The cash receipts journal for Engels Company is shown below. Describe how the amounts would be posted to the accounts receivable subsidiary ledger accounts.

Question 65

The cash receipts journal for Carlson Company is shown below. Describe how the amounts would be posted to the accounts receivable subsidiary ledger accounts.

Question 66

An NSF check from a customer. A. Option A.
B) Option B.
C) Option C.
D) Option D.

Question 67

Record the following transactions for the month of April 2013 on page 6 of a cash payments journal. Total, prove, and rule the cash payments journal as of April 30.

Question 68

Read each of the following transactions. Determine the accounts to be debited and credited.

A) Purchased merchandise for $950 in cash.
B) Issued a check for $752 to remit sales tax to the state sales tax authority.
C) Issued a check for $1,894 to purchase supplies.

Question 69

Record the following transactions for the month of April 2013 on page 4 of a cash receipts journal. Total, prove, and rule the cash receipts journal as of April 30.

Question 70

A canceled check for $147 erroneously listed on bank statement as $74. A. Option A.
B) Option B.
C) Option C.
D) Option D.

Question 71

Record the following transactions for the month of June 2013 on page 23 of a cash receipts journal. Total, prove, and rule the cash receipts journal as of June 30.

Question 72

A deposit in transit. A. Option A.
B) Option B.
C) Option C.
D) Option D.

Question 73

Record the following transactions for the month of November 2013 on page 18 of a cash payments journal. Total, prove, and rule the cash payments journal as of November 30.

Question 74

Record the following transactions for the month of June 2013 on page 6 of a cash payments journal. Total, prove, and rule the cash payments journal as of June 30.

Question 75

Record the following transactions for the month of November 2013 on page 8 of a cash receipts journal. Total, prove, and rule the cash receipts journal as of November 30.

Question 76

Read each of the following transactions. Determine the accounts to be debited and credited.

A) Collected cash in settlement of a $600 promissory note plus interest of $18.
B) Jaime Gomez, the owner, made an additional cash investment of $11,000.
C) Sold merchandise for $3,000 in cash plus sales tax of $210. There was a cash overage of $4.

Question 77

Read each of the following transactions. Determine the accounts to be debited and credited.

A) Issued a check for $2,500 to Jaime Gomez, the owner, as a cash withdrawal for personal use.
B) Issued a check for $75 to establish a petty cash fund.
C) Issued a check for $50 to replenish the petty cash fund. An analysis of the payments from the fund showed the following totals: Supplies, $25; Delivery Expense, $10; Miscellaneous Expense, $15.

Question 78

A service charge charged by the bank. A. Option A.
B) Option B.
C) Option C.
D) Option D.

Question 79

The cash receipts journal for Able Company is shown below. Describe how the amounts would be posted to the general ledger accounts.

Question 80

Read each of the following transactions. Determine the accounts to be debited and credited.

A) Sold merchandise for $200 in cash plus sales tax of $14.
B) Collected $3,400 from credit customers on account.
C) Sold merchandise for $1,600 in cash plus sales tax of $112. There was a cash shortage of $6.