Question 1

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

Accepted Answer

A restrictive endorsement limits the use of the check to the purpose stated in the endorsement, such as depositing it into a bank account. By specifying "Pay to any bank," it restricts the check's negotiability beyond the mere signature (blank endorsement) or identification (signature card) and is not indicative of a check that has been processed and voided (canceled check).

Question 2

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

Accepted Answer

Outstanding checks are those that have been issued but have not yet been presented to the bank for payment at the time the bank statement was prepared.

Question 3

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

Accepted Answer

If a shortage is found in the effort to prove cash, it means that the cash balance is less than what it should be according to the records. This indicates that an expense has occurred that has not been properly accounted for. Therefore, the amount of the shortage is treated as an expense.

Question 4

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

Accepted Answer

Deposits in transit are deposits made by the company but have not yet been recorded by the bank. These deposits will eventually appear on the bank statement in the following month.

Question 5

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

Accepted Answer

This journal entry records the return of an NSF check, where the Accounts Receivable account is debited to reduce the amount owed by the customer and the Cash account is credited for the amount returned. This entry would not be appropriate for EFTs, petty cash or ATM deposits.

Question 6

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

Accepted Answer

The correct journal entry for a bank service charge involves debiting (increasing) an expense account, in this case, Miscellaneous Expense, and crediting (decreasing) Cash. This reflects the expense incurred and the reduction in cash due to the bank service charge.

Question 7

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

Accepted Answer

The bank in which the drawer has money on deposit is called the drawee. The drawer is the person who writes the check, the payee is the person or business to whom the check is made payable, and the endorser is the person who signs the back of the check to transfer ownership to someone else.

Question 8

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

Accepted Answer

Service charges are subtracted from the checkbook balance because they are expenses charged by the bank that reduce the depositor's account balance, but may not have been recorded in the checkbook at the time of reconciliation.

Question 9

The bank statement for a checking account normally shows the

Accepted Answer

The bank statement for a checking account normally shows the amount of deposits and other credits added during the period, as well as any checks that have been processed and withdrawals made from the account. It will also often show any fees or charges that have been assessed by the bank. However, it typically does not include amounts of deposits to be made, checks written but not yet cashed, or amounts to be collected by the bank for the depositor's account.

Question 10

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

Accepted Answer

The payee is the person directed to receive the money. The drawer is the person who writes the check, the drawee is the bank where the drawer has an account, and the endorser is someone who signs the back of the check to transfer it to another person or entity.

Question 11

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

Accepted Answer

To replenish a petty cash fund, the total of the petty cash vouchers and the miscellaneous receipts not included with the petty cash vouchers are added up to determine the total amount spent. In this case, the total spent is $183 ($180 + $3). To restore the petty cash fund to its original amount, a journal entry is made debiting the various expense accounts for the total amount spent and crediting the Cash account for the same amount. Therefore, the answer is D, a credit to Cash for $183.

Question 12

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

Accepted Answer

The description matches that of a petty cash voucher, which serves as a record of each petty cash transaction. B is incorrect because petty cash is usually not paid by check. C is too general and does not specify the type of document. D is incorrect because a petty cash register refers to a log or record of all petty cash transactions, not just individual payments.

Question 13

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

Accepted Answer

When the bank mails a credit memo indicating the amount of interest credited to the account, it means that the depositor's account has increased due to the interest earned. Therefore, the transaction recorded in the accounting records of the depositor should be a debit to Cash (as the account balance has increased) and a credit to Interest Earned (as this is the account where the interest income is recorded). Option A is incorrect because you don't debit interest earned account and credit cash when you receive interest income rather debit cash account and credit interest earned account. Option B is incorrect because Interest Expense is used to record the interest paid by the depositor, not interest earned. Option D is also incorrect as Interest Expense is used to record the interest paid by the depositor, not interest earned.

Question 14

To use an ATM machine, the depositor must have a

Accepted Answer

To use an ATM machine, the depositor must have a Personal Identification Number (PIN). The other options listed are unrelated or incorrect.

Question 15

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

Accepted Answer

Reconciling the bank statement is the process of comparing and adjusting the bank balance to the book balance, in order to ensure that they match and accurately reflect the actual amount of cash available. Options B, C, and D do not accurately describe this process.

Question 16

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

Accepted Answer

A blank endorsement occurs when the payee signs the back of the check and does not specify any particular person or entity as the new recipient of the funds. This means that the check can now be cashed or deposited by anyone who possesses it, making it a risky move if the check is lost or stolen.

Question 17

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

Accepted Answer

Service charges are subtracted from the checkbook balance because they are expenses charged by the bank that reduce the depositor's account balance, but may not have been recorded in the checkbook at the time of reconciliation.

Question 18

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

Accepted Answer

The total of all the classified expenditures is $20+$12+$6+$5=$43. Therefore, the journal entry to replenish the petty cash fund would include a credit to Cash for $43.

Question 19

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

Accepted Answer

The person who orders the bank to pay a certain amount of money is called the drawer.

Question 20

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

Accepted Answer

Outstanding checks represent checks that the company has written but have not yet cleared the bank. Therefore, they have not yet been deducted from the bank statement balance. To reconcile the bank statement, the outstanding checks amount is subtracted from the bank statement balance to arrive at the adjusted/corrected bank balance. The service charge and amounts collected by the bank for the depositor's account would be deducted from the company's records or added to the bank balance since they have already been recorded by the bank. Deposits in transit represent deposits that the company has made but have not yet been added to the bank balance. Therefore, they are added to the bank statement balance when reconciling the bank statement.

Quiz 7: Accounting for Cash

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

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

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

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

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

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

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

The bank statement for a checking account normally shows the

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

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 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

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

To use an ATM machine, the depositor must have a

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

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

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

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

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