Question 1

In a bank reconciliation, a NSF check is:
A)added to the bank balance.
B)added to the book balance.
C)deducted from the book balance.
D)deducted from the bank balance.

Accepted Answer

The answer of In a bank reconciliation, a NSF check...

Question 2

When preparing a bank reconciliation, which of the following items should be subtracted from the bank balance?
A)Deposits in transit
B)Bank service charges
C)EFT cash receipts
D)Outstanding checks

Accepted Answer

Outstanding checks should be subtracted from the bank balance because they represent checks that have been issued by the company but have not yet been cleared by the bank, thus reducing the actual available balance.

Question 3

Herbert Company deposited $25,000 in its bank on the same day as-but after-the bank prepared Herbert Company's bank statement. The deposit should appear on the bank reconciliation as a(n)__________ and is called a(n)__________.
A)addition to the bank balance; outstanding deposit
B)addition to the bank balance; deposit in transit
C)deduction to the bank balance; deposit in transit
D)deduction to the bank balance; outstanding deposit

Accepted Answer

The deposit made by Herbert Company after the bank prepared the bank statement is called deposit in transit. It should be added to the bank balance on the bank reconciliation to get the correct balance. Therefore, the correct choice is B - addition to the bank balance; deposit in transit.

Question 4

A bank charge of $40 for imprinting checks would appear on the bank reconciliation as a(n)__________ to (or from)the ____????______ balance.
A)addition; bank
B)deduction; bank
C)addition; book
D)deduction; book

Accepted Answer

The bank charge of $40 would decrease the book balance because it is a check printing fee charged by the bank and it has not been recorded in the company's books. Therefore, it is a deduction from the book balance.

Question 5

In a bank reconciliation, items recorded by the bank, but not yet recorded by the company, include:
A)deposits in transit.
B)bank collections.
C)outstanding checks.
D)both deposits in transit and outstanding checks.

Accepted Answer

The answer of In a bank reconciliation, items recorded by...

Question 6

Gamma Company has an account at First Bank. Gamma writes a check payable to Delta Company. In this transaction, Delta Company is the:
A)payee.
B)payer.
C)drawer.
D)maker.

Accepted Answer

Delta Company is the payee because they are the recipient of the check and will be paid by First Bank through Gamma Company's account.

Question 7

Which of the following items will cause a difference between the book balance and the bank balance?
A)Timing deposits
B)Bank collections
C)Canceled checks
D)Outstanding voided checks

Accepted Answer

Bank collections can cause a difference between the book balance and the bank balance because they may not be recorded in the company's books until after the bank has processed them.

Question 8

In a bank reconciliation, items recorded by the company, but not yet been recorded by the bank, include:
A)interest.
B)outstanding checks.
C)NSF checks.
D)bank service charges.

Accepted Answer

Outstanding checks are checks that have been written by the company, but have not yet cleared the bank. Therefore, they have been recorded by the company but not by the bank. Interest, NSF checks, and bank service charges would all be recorded by the bank and would therefore not be items recorded by the company, but not yet recorded by the bank.

Question 9

If a bookkeeper mistakenly records a disbursement as $36 instead of the correct amount of $63, the error should be shown on the bank reconciliation as a:
A)$27 addition to the books.
B)$27 deduction from the books.
C)$36 addition to the books.
D)$36 deduction from the books.

Accepted Answer

Since the bookkeeper recorded the disbursement as $36 instead of $63, there is an understatement of $27 in the books. Therefore, the error should be shown on the bank reconciliation as a deduction from the books in the amount of $27.

Question 10

The checks that have been paid by the bank on behalf of the depositor, which are included with the bank statement, are called:
A)outstanding checks.
B)canceled checks.
C)checks in transit.
D)NSF checks.

Accepted Answer

Checks that have been paid by the bank on behalf of the depositor and included with the bank statement are called canceled checks. Outstanding checks are checks that have been written but have not yet been presented to the bank for payment. Checks in transit are checks that have been deposited but have not yet been cleared by the bank. NSF checks refer to checks that have been returned due to insufficient funds.

Question 11

Checks written by a company, but not yet paid by the bank, appear on the bank reconciliation as __________ and are called __________.
A)deductions from the bank balance; checks in transit
B)deductions from the bank balance; outstanding checks
C)additions to the bank balance; checks in transit
D)additions to the bank balance; check items

Accepted Answer

Checks that have been written by the company but have not yet cleared the bank are deducted from the bank balance and are referred to as outstanding checks, not checks in transit. Checks in transit refer to checks that have been received by the bank but have not yet been credited to the company's account. Addition to the bank balance and check items are not the correct terms for describing these checks.

Question 12

In a bank reconciliation, an EFT cash payment is:
A)added to the bank balance.
B)added to the book balance.
C)deducted from the book balance.
D)deducted from the bank balance.

Accepted Answer

An EFT (Electronic Funds Transfer) cash payment is a deduction because it has already been recorded in the book balance as an expense, but it might not have cleared the bank yet. Therefore, it must be deducted from the book balance to reconcile it with the bank balance.

Question 13

Differences between the amount of cash reported on a company's bank statement and the balance in the company's Cash account before the bank reconciliation are primarily due to:
A)errors in the accounting process by the company.
B)errors made by the bank.
C)differences between the cash basis and accrual basis of accounting.
D)the timing difference in recording transactions.

Accepted Answer

The differences between the amount of cash reported on a company's bank statement and the balance in the company's Cash account before the bank reconciliation are primarily due to timing differences in recording transactions. This can include checks that haven't cleared the bank yet, deposits in transit, or bank fees that haven't been recorded yet. These differences can be reconciled through the bank reconciliation process, which identifies and resolves any discrepancies. While errors in the accounting process by the company or errors made by the bank can also contribute to these differences, they are typically not the primary cause. Differences between the cash basis and accrual basis of accounting would typically be addressed through adjusting entries rather than through the bank reconciliation process.

Question 14

A bank deposit of $450 recorded by the bank as $500 should appear on a bank reconciliation as a(n):
A)deduction from the book balance of $50.
B)addition to the book balance of $50.
C)deduction from the bank balance of $50.
D)addition to the bank balance of $50.

Accepted Answer

The bank recorded the deposit as $500 instead of $450, so the bank balance is overstated by $50. To reconcile, you need to deduct $50 from the bank balance.

Question 15

In a bank reconciliation, an EFT cash receipt is:
A)added to the bank balance.
B)added to the book balance.
C)deducted from the book balance.
D)deducted from the bank balance.

Accepted Answer

An EFT (Electronic Funds Transfer) cash receipt is added to the book balance because it represents funds that have been received by the bank but not yet recorded in the company's books.

Question 16

A bank collected $200 on behalf of its customer. The $200 should appear on the bank reconciliation as:
A)added to the bank balance.
B)added to the book balance.
C)deducted from the book balance.
D)having no impact on the book balance.

Accepted Answer

The $200 collected by the bank on behalf of the customer should be added to the book balance because it represents funds that the bank has received but the customer has not yet recorded in their books.

Question 17

Interest paid by the bank to a company's account should appear on the bank reconciliation as:
A)added to the bank balance.
B)added to the book balance.
C)deducted from the book balance.
D)having no impact on the book balance.

Accepted Answer

Interest paid by the bank increases the company's book balance, so it should be added to the book balance when reconciling the bank statement.

Question 18

If a bookkeeper mistakenly records a disbursement as $810 instead of the correct amount of $180, the error should be shown on the bank reconciliation as a(n):
A)$180 addition to the books.
B)$180 deduction from the books.
C)$630 addition to the books.
D)$630 deduction from the books.

Accepted Answer

The error is $810 - $180 = $630. Since the bookkeeper recorded $810 instead of $180, the books show $630 more than they should. Therefore, a $630 addition to the books is needed to correct this error.

Question 19

The person who prepares the bank reconciliation:
A)should also be responsible for cash receipts.
B)should also be responsible for cash disbursements.
C)should be responsible for both cash receipts and cash disbursements.
D)should have no other cash duties.

Accepted Answer

The person who prepares the bank reconciliation should not have any other cash duties to ensure separation of duties and prevent potential fraud or errors. This helps to ensure the accuracy and integrity of the bank reconciliation process.

Question 20

When preparing a bank reconciliation, which of the following items should be added to the book balance?
A)EFT receipts
B)Deposits in transit
C)Collection items
D)Both EFT receipts and collection items

Accepted Answer

The answer of When preparing a bank reconciliation, which of...

Quiz 4: Internal Control Cash

In a bank reconciliation, a NSF check is:

When preparing a bank reconciliation, which of the following items should be subtracted from the bank balance?

Herbert Company deposited $25,000 in its bank on the same day as-but after-the bank prepared Herbert Company's bank statement. The deposit should appear on the bank reconciliation as a(n) and is called a(n) .

A bank charge of $40 for imprinting checks would appear on the bank reconciliation as a(n) ____ to (or from) the ???? balance.

In a bank reconciliation, items recorded by the bank, but not yet recorded by the company, include:

Gamma Company has an account at First Bank. Gamma writes a check payable to Delta Company. In this transaction, Delta Company is the:

Which of the following items will cause a difference between the book balance and the bank balance?

In a bank reconciliation, items recorded by the company, but not yet been recorded by the bank, include:

If a bookkeeper mistakenly records a disbursement as $36 instead of the correct amount of $63, the error should be shown on the bank reconciliation as a:

The checks that have been paid by the bank on behalf of the depositor, which are included with the bank statement, are called:

Checks written by a company, but not yet paid by the bank, appear on the bank reconciliation as and are called .

In a bank reconciliation, an EFT cash payment is:

Differences between the amount of cash reported on a company's bank statement and the balance in the company's Cash account before the bank reconciliation are primarily due to:

A bank deposit of $450 recorded by the bank as $500 should appear on a bank reconciliation as a(n) :

In a bank reconciliation, an EFT cash receipt is:

A bank collected $200 on behalf of its customer. The $200 should appear on the bank reconciliation as:

Interest paid by the bank to a company's account should appear on the bank reconciliation as:

If a bookkeeper mistakenly records a disbursement as $810 instead of the correct amount of $180, the error should be shown on the bank reconciliation as a(n) :

The person who prepares the bank reconciliation:

When preparing a bank reconciliation, which of the following items should be added to the book balance?