Question 1

If the bank reconciliation includes a deposit in transit,a journal entry is required that includes a debit to cash.

Accepted Answer

A deposit in transit is already included in the company's cash records but not yet in the bank's records, so no additional journal entry is needed for it in the company's books.

Question 2

Which of the following items are reconciling items on the bank side of the reconciliation?

Accepted Answer

Deposits in transit and outstanding checks are reconciling items on the bank side of a bank reconciliation. Deposits in transit are amounts that have been received and recorded by the company but not yet recorded by the bank, while outstanding checks are checks the company has issued and recorded but have not yet been cleared by the bank.

Question 3

Refer to the following bank reconciliation:
  Journalize the adjusting entry for the third reconciling item: NSF check.Omit explanation

Accepted Answer

The answer of Refer to the following bank reconciliation:
 ...

Question 4

A customer's check for $1,200 was returned for nonsufficient funds.Which of the following journal entries is needed to adjust for the NSF check?

Accepted Answer

When a check is returned for nonsufficient funds (NSF), the company must reverse the initial recording of the check as cash. This is done by debiting Accounts Receivable to increase it (indicating the customer still owes the money) and crediting Cash to decrease it (removing the amount that was initially recorded as received).

Question 5

Which of the following items would require an adjusting entry after preparation of the bank reconciliation?

Accepted Answer

Errors made on the books revealed by the bank reconciliation require an adjusting entry to correct the company's cash account to reflect the accurate cash balance. Errors by the bank do not affect the company's books directly and outstanding checks are reconciling items that do not require an adjusting entry.

Question 6

The cash balance in a company's general ledger and the company's bank balance on the bank statement will always be the same.

Accepted Answer

The cash balance in a company's general ledger and the company's bank balance on the bank statement may differ due to timing differences of deposits or checks clearing, bank fees, and errors. This is why companies must reconcile their bank statements to their general ledger cash balance.

Question 7

Journal entries that arise from reconciling items on the book side of the bank reconciliation include either a debit to Cash or a credit to Cash.

Accepted Answer

When reconciling items on the book side of the bank reconciliation, any adjustments made to correct discrepancies usually involve recording a debit or credit to the Cash account in the company's books. For example, if a check that was outstanding clears the bank, the company needs to reduce the outstanding amount in their books by recording a debit to Cash. On the other hand, if the bank adds interest earnings to the account, the company needs to increase the balance by recording a credit to Cash. Therefore, both debits and credits to Cash can arise when reconciling items on the book side of the bank reconciliation.

Question 8

The bank charged a service fee of $55.How would this information be included on the bank reconciliation?

Accepted Answer

The bank charged a service fee of $55, so this amount would be deducted from the book side of the reconciliation to bring the book balance in line with the adjusted bank balance.

Question 9

The bookkeeper of Wilson Electric Supply Company recorded a $1,591 check as $15,910 in payment of the current month's rent.Which of the following journal entries is needed to adjust for this error in the books of the company?

Accepted Answer

The correct adjustment requires decreasing Cash by the overstatement amount ($15,910 - $1,591 = $14,319) and decreasing Rent Expense by the same amount to correct the error.

Question 10

Which of the following would be included in the journal to record an NSF check?

Accepted Answer

An NSF (Non-Sufficient Funds) check is a check that cannot be processed because the account it is drawn on does not have enough funds. When a business receives an NSF check, it must reverse the initial entry of receiving cash. Therefore, the business debits Accounts Receivable to increase it (since the expected cash was not received and the customer still owes the money) and credits Cash to decrease it (to reflect the reduction in cash due to the NSF check).

Question 11

Journal entries are required if the bank reconciliation includes a book error.

Accepted Answer

Journal entries are required to correct any errors that are found during the bank reconciliation process. This includes book errors, which may be identified when comparing the bank statement to the company's records. Book errors should be corrected by adjusting the company's records to reflect the correct information, and this adjustment should be recorded in the general ledger using a journal entry.

Question 12

No journal entries are required for the reconciling items on the bank side because ________.

Accepted Answer

The correct answer is A because those transactions have already been recorded in the company's journal.

Question 13

Which of the following items are reconciling items on the book side of the reconciliation?

Accepted Answer

Reconciling items on the book side include bank service charges and corrections of book errors, as these are adjustments needed to align the book balance with the bank statement.

Question 14

On a bank reconciliation,deposits in transit are added on the bank side of the reconciliation.

Accepted Answer

Deposits in transit refer to deposits that have been made by the company but have not yet been recorded by the bank. Therefore, they should be added on the bank side of the reconciliation to reflect the correct balance.

Question 15

Journal entries are required for the reconciling items on the book side because ________.

Accepted Answer

Journal entries are required for the reconciling items on the book side because those transactions have not yet been recorded on the company's books. This is necessary to ensure that the company's accounting records are accurate and reflect all transactions that have occurred.

Question 16

Refer to the following bank reconciliation.
  Journalize the adjusting entry for the fourth reconciling item: Bank service charge.Omit explanation

Accepted Answer

The answer of Refer to the following bank reconciliation.
 ...

Question 17

Journal entries are required if the bank reconciliation includes outstanding checks.

Accepted Answer

Outstanding checks are accounted for in the bank reconciliation process to adjust the bank statement balance, but they do not require a separate journal entry since they have already been recorded in the company's cash account when the checks were issued.

Question 18

Refer to the following bank reconciliation:
  Journalize the adjusting entry for the second reconciling item: Interest revenue.Omit explanation

Accepted Answer

The answer of Refer to the following bank reconciliation:
 ...

Question 19

Refer to the following bank reconciliation:
  Journalize the adjusting entry for the first reconciling item: Note collected by bank.Omit explanation.

Accepted Answer

The answer of Refer to the following bank reconciliation:
 ...

Question 20

If the bank reconciliation includes a bank service charge,a journal entry is required,which debits Bank Expense and credits Cash.

Accepted Answer

This is true because the bank service charge represents an expense incurred by the company, which needs to be recorded in the accounting system. The journal entry for this transaction would be to debit the Bank Expense account (increasing expenses) and credit the Cash account (decreasing assets).

Quiz 8: Internal Control and Cash

If the bank reconciliation includes a deposit in transit,a journal entry is required that includes a debit to cash.

Which of the following items are reconciling items on the bank side of the reconciliation?

Refer to the following bank reconciliation: Journalize the adjusting entry for the third reconciling item: NSF check.Omit explanation

A customer's check for $1,200 was returned for nonsufficient funds.Which of the following journal entries is needed to adjust for the NSF check?

Which of the following items would require an adjusting entry after preparation of the bank reconciliation?

The cash balance in a company's general ledger and the company's bank balance on the bank statement will always be the same.

Journal entries that arise from reconciling items on the book side of the bank reconciliation include either a debit to Cash or a credit to Cash.

The bank charged a service fee of $55.How would this information be included on the bank reconciliation?

The bookkeeper of Wilson Electric Supply Company recorded a $1,591 check as $15,910 in payment of the current month's rent.Which of the following journal entries is needed to adjust for this error in the books of the company?

Which of the following would be included in the journal to record an NSF check?

Journal entries are required if the bank reconciliation includes a book error.

No journal entries are required for the reconciling items on the bank side because ________.

Which of the following items are reconciling items on the book side of the reconciliation?

On a bank reconciliation,deposits in transit are added on the bank side of the reconciliation.

Journal entries are required for the reconciling items on the book side because ________.

Refer to the following bank reconciliation. Journalize the adjusting entry for the fourth reconciling item: Bank service charge.Omit explanation

Journal entries are required if the bank reconciliation includes outstanding checks.

Refer to the following bank reconciliation: Journalize the adjusting entry for the second reconciling item: Interest revenue.Omit explanation

Refer to the following bank reconciliation: Journalize the adjusting entry for the first reconciling item: Note collected by bank.Omit explanation.

If the bank reconciliation includes a bank service charge,a journal entry is required,which debits Bank Expense and credits Cash.