Question 1

To use an ATM machine, the depositor must have a

Accepted Answer

In order to use an ATM machine, the depositor must have a PIN number, which is a personal identification number that is used to access their bank account and perform transactions. The other options listed (bank number, BIN number, and TIN number) are not required for ATM use.

Question 2

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 the expenses is $43. To replenish the petty cash fund, the company must credit cash for the amount that was spent from the fund. Therefore, the journal entry should include a credit to Cash for $43.

Question 3

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

Accepted Answer

A debit to Accounts Receivable and a credit to Cash would be an accurate journal entry to record not sufficient funds (NSF) checks received from customers. When a customer's check bounces due to insufficient funds, the entry would reduce the amount of Accounts Receivable (since the customer has not actually paid) and increase the amount of Cash (since the check was deposited, but ultimately did not clear).

Question 4

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

A petty cash voucher is a form used to document petty cash transactions, including the name of the payee, purpose of payment, and account charged. Petty cash checks are not typically used, and while a petty cash document is a possibility, the specific term "petty cash voucher" is more commonly used. A petty cash register may be used to track transactions, but it is not the specific form used for documenting payments.

Question 5

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 6

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

Accepted Answer

The drawer is the person who orders the bank to pay a certain amount of money by writing the check. The drawee is the bank that the check is drawn on and the payee is the person or entity receiving the money. The endorser is someone who signs the back of the check to transfer it to someone else.

Question 7

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 8

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

When the named payee signs their name on the back of the check, it is called a blank endorsement. This type of endorsement allows anyone who possesses the check to cash or deposit it, making it less secure than other types of endorsements like restrictive or regular.

Question 9

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

Accepted Answer

The process of bringing the book and the bank balance into agreement is referred to as reconciling the bank statement. This involves comparing the transactions recorded in the company's cash book to the bank statement to identify any discrepancies or mistakes. The aim is to ensure that the balance on the company's books matches the balance on the bank statement.

Question 10

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 entity who receives the funds, and the endorser is the person who signs the back of the check to transfer ownership to someone else.

Question 11

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

Accepted Answer

The payee is the person who is directed to receive the money. The drawer is the person who writes the check, the drawee is the bank or financial institution where the funds are held, and the endorser is someone who signs the back of the check to transfer ownership.

Question 12

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

Accepted Answer

Outstanding checks are checks issued by the depositor but have not yet been presented to the bank for payment. Therefore, they reduce the actual bank balance and need to be subtracted from the bank statement balance when reconciling. Service charges (A) are fees charged by the bank for its services and reduce the depositor's account balance, but they are not subtracted from the bank statement balance. Deposits in transit (C) are deposits made by the depositor but not yet recorded by the bank, so they increase the actual bank balance and need to be added to the bank statement balance when reconciling. Amounts collected by the bank for the depositor's account (D) are funds received by the bank on the depositor's behalf, such as interest earnings or customer payments, and they increase the depositor's account balance, but they are not subtracted from the bank statement balance.

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, the transaction recorded by the depositor should reflect the increase in the amount of cash received as interest income. Therefore, the depositor would debit Cash and credit Interest Earned. This would increase the balance of the Cash account and recognize the interest earned as revenue in the Income Statement. Option A and B would be used if the depositor paid or received interest, respectively. Option D would be used if the depositor incurred interest expenses, which is not applicable in this scenario.

Question 14

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 refers to the deposits made by the company that have not yet been recorded by the bank on the bank statement. This is likely due to the timing difference between when the deposit is made and when the bank processes and records it.

Question 15

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 16

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 while proving cash, it means that the amount is missing or has not been recorded properly. In accounting principles, a shortage is treated as an expense because the business has lost money. Therefore, option D is the correct answer.

Question 17

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 checks that have been issued by the company but have not yet been presented to the bank for payment before the bank statement was prepared. They are considered as a deduction from the bank balance in the bank reconciliation process.

Question 18

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

Accepted Answer

The answer of To reconcile the bank statement, which of...

Question 19

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

The total amount of cash vouchers and miscellaneous receipts is $183 ($180 + $3). Therefore, the journal entry would include a credit to Cash for $183 to replenish the fund.

Question 20

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. It also shows any withdrawals or checks that have cleared during the period, as well as any fees or other charges assessed by the bank. The statement may also show the current balance in the account, as well as any interest earned or other special features of the account. However, it typically does not show 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.

Quiz 7: Accounting for Cash