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

Question 1

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.

Answer 1

True

Question 2

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

Answer 2

False

Question 3

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

Answer 3

Sales Tax Payable

Question 4

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

Question 5

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

Question 6

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

Question 7

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

Question 8

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

Question 9

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

Question 10

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

Question 11

Purchases Discounts is a contra cost of goods sold account.

Question 12

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.

Question 13

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 14

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 15

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

Question 16

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

Question 17

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

Question 18

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

Question 19

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

Question 20

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

Question 21

The entry to create a petty cash fund includes

A) a debit to Cash and a credit to Petty Cash Fund.
B) a debit to Petty Cash Fund and a credit to Cash.
C) a debit to Petty Cash Fund and a credit to Cash Over and Short.
D) a debit to Cash and a credit to Miscellaneous Expense.

Question 22

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 23

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 24

Identify the procedure below that is

A) Hold all cash received during a month and make one bank deposit at the end of the month.
B) Keep cash receipts in a cash register or locked cash drawer or safe.
C) Have only designated employees receive and handle cash received by the business.
D) Enter cash receipts transactions in the accounting records promptly.

Question 25

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 26

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 27

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 28

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 29

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

Question 30

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 31

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 32

Which of the following statements is NOT correct regarding the cash receipts journal?

A) After posting a column total from the cash receipts journal to a general ledger account,a (√)is entered at the bottom of the journal column.
B) The amounts that appear in the Other Accounts Credit column are posted individually to the general ledger accounts during the month.
C) Before any posting to the general ledger takes place,the equality of the debits and credits recorded in the cash receipts journal are proved.
D) The amounts recorded in the Accounts Receivable Credit column are posted daily to individual accounts in the accounts receivable subsidiary ledger.

Question 33

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 34

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 35

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 36

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 37

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 38

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

Question 39

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 40

Identify the procedure below that is

A) Enter all cash payments promptly in the accounting records.
B) Have only designated personnel approve bills and invoices before they are paid.
C) Make all payments out of a petty cash fund or a travel and entertainment fund.
D) Use prenumbered check forms.

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

The entry to record the issuance of a check in settlement of an interest-bearing promissory note of $4,000 and the interest owed on the note of $100,would be to:

A) debit Interest Expense $100,debit Notes Payable $4,000 and credit Cash $4,100.
B) debit Cash $4,100,credit Notes Payable $4,000 and credit Cash $100.
C) debit Notes Payable $4,100 and credit Cash $4,100.
D) debit Accounts Payable $4,000,debit Interest Expense $100 and credit Cash $4,100.

Question 43

Indicate in which section of the Bank Reconciliation Statement the following reconciling items would appear. 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 44

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 45

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 46

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 47

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 48

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 49

Indicate in which section of the Bank Reconciliation Statement the following reconciling items would appear. 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 50

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 51

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 52

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 53

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 54

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 55

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 56

Indicate in which section of the Bank Reconciliation Statement the following reconciling items would appear. An NSF check from a customer.

A) Option A
B) Option B
C) Option C
D) Option D

Question 57

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 58

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 59

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 60

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 61

Record the following transactions for the month of April,2016 on page 4 of a cash receipts journal.Total,prove,and rule the cash receipts journal as of April 30.

Question 62

Record the following transactions for the month of April 2016 on page 6 of a cash payments journal.Total,prove,and rule the cash payments journal as of April 30.

Question 63

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 64

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 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

Record the following transactions for the month of June 2016 on page 23 of a cash receipts journal.Total,prove,and rule the cash receipts journal as of June 30.

Question 67

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.

Question 68

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 69

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

Question 70

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 71

Indicate in which section of the Bank Reconciliation Statement the following reconciling items would appear. A deposit in transit.

A) Option A
B) Option B
C) Option C
D) Option D

Question 72

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 73

Indicate in which section of the Bank Reconciliation Statement the following reconciling items would appear. A service charge charged by the bank.

A) Option A
B) Option B
C) Option C
D) Option D

Question 74

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 Book Balance of Cash Additions
C) Bank Statement Balance Deductions and Book Balance of Cash Deductions
D) Book Balance of Cash Additions and Book Balance of Cash Deductions

Question 75

Record the following transactions for the month of November 2016 on page 8 of a cash receipts journal.Total,prove,and rule the cash receipts journal as of November 30.

Question 76

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

Question 77

Valerie's Market uses a perpetual inventory system when recording its cash payments and cash receipts.The business sells $6,000 of goods to a charge account customer with terms of 1/10,n/30.If the customer pays within the discount period,the entry to record the receipt of cash from the customer would include:

A) a debit to Sales Discounts for $60 and a credit to Accounts Receivable for $6,000
B) a debit to Cash for $6,000 and a credit to Accounts Receivable for $6,000
C) a debit to Sales Discounts for $600 and a credit to Accounts Receivable for $5,400
D) a debit to Purchase Discounts for $60 and a credit to Accounts Receivable for $5,940

Question 78

Hawthorne Inc.uses the perpetual inventory system when recording its cash payments and cash receipts.If the company issues a check to pay for goods purchased and they pay within the discount period,identify the account used to record the discount.

A) purchases
B) purchases discounts
C) merchandise inventory
D) sales discounts

Question 79

Phones R Us uses a perpetual inventory system when recording its cash payments and cash receipts.In June,the business purchases $5,000 of goods on account with terms of 2/10,n/30.Select the correct entry to record the payment of the goods within the discount period.

A)

B)

C)

D)

Question 80

The March bank reconciliation statement for Cab World,Inc. ,showed an NSF check of $300 from J.Brown as well as a bank service charge of $20 for monthly service fees.Select the journal entry required to record these items.

A)

B)

C)

D)