Question 1

The change fund is what type of account?
A)Expense
B)Revenue
C)Asset
D)Liability

Accepted Answer

The change fund is a type of asset account because it is cash that the business holds on hand to give customers correct change. It is not an expense or revenue account because it is not used to pay for expenses or generate income, and it is not a liability account because the business does not owe anyone else the money in the change fund.

Question 2

Petty Cash is an asset shown on the balance sheet.

Accepted Answer

Petty Cash is considered an asset because it represents actual cash on hand that can be used by the company for small expenses. It is typically shown under the current assets section of the balance sheet.

Question 3

Indicate which effect(s)each situation will have:
1. New check written
2. Recorded in the general journal
3. Recorded in auxiliary petty cash record
4. Petty cash voucher prepared
-________ Replenishment of petty cash

Accepted Answer

The answer of Indicate which effect(s)each situation will have:
1. New...

Question 4

The entry to replenish a $300 petty cash fund, which has cash of $140 and valid receipts for $148, would include:
A)a credit to Cash for $160.
B)a debit to Petty Cash for $160.
C)a credit to Cash for $148.
D)a credit to Petty Cash for $148.

Accepted Answer

The answer of The entry to replenish a $300 petty...

Question 5

Vanessa's Gymnastics' cash register tapes do not agree with cash receipts. The facts are: total cash register tapes $400; total coins and currency $404. The summary journal entry to record the day's transactions would include a:
A)$400 debit to Cash; $4 debit to Cash Short/Over; and $404 credit to Sales.
B)$404 debit to Cash; $4 credit to Cash Short/Over; and $400 credit to Sales.
C)$404 debit to Cash and $404 credit to Sales.
D)$400 debit to Cash and $400 credit to Sales.

Accepted Answer

The discrepancy between the cash register tapes and cash receipts indicates that there is a cash shortage or overage. The total coins and currency of $404 represents the actual amount of cash received, so it should be debited to the Cash account. The difference of $4 represents the Cash Short/Over account, which should be credited. Finally, since the Gymnastics made sales during the day, Sales should be credited for the total amount of $400. Therefore, the correct journal entry is: $404 debit to Cash; $4 credit to Cash Short/Over; and $400 credit to Sales.

Question 6

Which of the following transactions would most likely not be recorded in an auxiliary petty cash record?
A)Purchase of first aid supplies
B)Purchase of postage stamps
C)Payment on a $600 utility bill
D)Payment of gas for the company vehicle

Accepted Answer

Payments on a large utility bill would likely be recorded in the regular accounting system and not in the petty cash record. The other transactions are small, everyday expenses that could be paid for with petty cash.

Question 7

Samantha's Tutoring Service's $200 petty cash fund has a shortage of $4. The facts are: $80 in valid receipts for expenses; $116 in coins and currency. The journal entry to replenish the petty cash fund would include a:
A)credit to Cash for $80.
B)credit to Petty Cash for $84.
C)credit to Cash Short/Over for $4.
D)debit to Cash Short/Over for $4.

Accepted Answer

The answer of Samantha's Tutoring Service's $200 petty cash fund...

Question 8

Indicate which effect(s)each situation will have:
1. New check written
2. Recorded in the general journal
3. Recorded in auxiliary petty cash record
4. Petty cash voucher prepared
-________ Establishment of petty cash

Accepted Answer

The answer of Indicate which effect(s)each situation will have:
1. New...

Question 9

Prepare journal entries for the following petty cash fund transactions:

Accepted Answer

The answer of Prepare journal entries for the following petty...

Question 10

Indicate which effect(s)each situation will have:
1. New check written
2. Recorded in the general journal
3. Recorded in auxiliary petty cash record
4. Petty cash voucher prepared
-________ Filled up the company's van with gas

Accepted Answer

The answer of Indicate which effect(s)each situation will have:
1. New...

Question 11

Prepare journal entries for the following petty cash fund transactions:

Accepted Answer

The answer of Prepare journal entries for the following petty...

Question 12

An employee assigned the responsibility for overseeing the petty cash fund is called the custodian.

Accepted Answer

The custodian is responsible for overseeing and managing the petty cash fund.

Question 13

The petty cash overage was not recorded. This would cause:
A)revenues to be overstated.
B)revenues to be understated.
C)expenses to be overstated.
D)expenses to be understated.

Accepted Answer

The answer of The petty cash overage was not recorded....

Question 14

The Petty Cash account is used to pay for small items such as postage stamps and supplies.

Accepted Answer

Petty Cash account is used to pay for small expenses such as postage stamps, office supplies, and other miscellaneous items.

Question 15

Indicate which effect(s)each situation will have:
1. New check written
2. Recorded in the general journal
3. Recorded in auxiliary petty cash record
4. Petty cash voucher prepared
-________ Bought Supplies on account

Accepted Answer

Buying supplies on account means the transaction is recorded as a liability (accounts payable) and an asset (supplies) in the general journal. It does not involve writing a check, using petty cash, or preparing a petty cash voucher.

Question 16

The normal balance of the Petty Cash account is a credit.

Accepted Answer

The normal balance of the Petty Cash account is a debit, not a credit. Petty cash is an asset account, and like all asset accounts, it has a debit normal balance.

Question 17

Indicate which effect(s)each situation will have:
1. New check written
2. Recorded in the general journal
3. Recorded in auxiliary petty cash record
4. Petty cash voucher prepared
-________ Bought a book of stamps

Accepted Answer

The answer of Indicate which effect(s)each situation will have:
1. New...

Question 18

Indicate which effect(s)each situation will have:
1. New check written
2. Recorded in the general journal
3. Recorded in auxiliary petty cash record
4. Petty cash voucher prepared
-________ Owner withdrew money from the company for personal use

Accepted Answer

The answer of Indicate which effect(s)each situation will have:
1. New...

Question 19

The Petty Cash account should always be debited when the fund is replenished.

Accepted Answer

When replenishing the Petty Cash fund, the Petty Cash account is not debited; instead, the expenses recorded by the petty cash receipts are debited to their respective expense accounts, and the Cash account is credited.

Question 20

A company would use a change fund if:
A)there are cash transactions daily.
B)they want to pay the postage expense without writing a check.
C)the owner wants to make personal withdrawals easily.
D)None of these are correct.

Accepted Answer

A change fund is used to provide cash for daily cash transactions, such as making change for customers. It is not used for paying expenses like postage or for personal withdrawals by the owner.

Quiz 6: Banking Procedure and Control of Cash

The change fund is what type of account?

Petty Cash is an asset shown on the balance sheet.

Indicate which effect(s)each situation will have: 1. New check written 2. Recorded in the general journal 3. Recorded in auxiliary petty cash record 4. Petty cash voucher prepared -________ Replenishment of petty cash

The entry to replenish a $300 petty cash fund, which has cash of $140 and valid receipts for $148, would include:

Vanessa's Gymnastics' cash register tapes do not agree with cash receipts. The facts are: total cash register tapes $400; total coins and currency $404. The summary journal entry to record the day's transactions would include a:

Which of the following transactions would most likely not be recorded in an auxiliary petty cash record?

Samantha's Tutoring Service's $200 petty cash fund has a shortage of $4. The facts are: $80 in valid receipts for expenses; $116 in coins and currency. The journal entry to replenish the petty cash fund would include a:

Indicate which effect(s)each situation will have: 1. New check written 2. Recorded in the general journal 3. Recorded in auxiliary petty cash record 4. Petty cash voucher prepared -________ Establishment of petty cash

Prepare journal entries for the following petty cash fund transactions:

Indicate which effect(s)each situation will have: 1. New check written 2. Recorded in the general journal 3. Recorded in auxiliary petty cash record 4. Petty cash voucher prepared -________ Filled up the company's van with gas

Prepare journal entries for the following petty cash fund transactions:

An employee assigned the responsibility for overseeing the petty cash fund is called the custodian.

The petty cash overage was not recorded. This would cause:

The Petty Cash account is used to pay for small items such as postage stamps and supplies.

Indicate which effect(s)each situation will have: 1. New check written 2. Recorded in the general journal 3. Recorded in auxiliary petty cash record 4. Petty cash voucher prepared -________ Bought Supplies on account

The normal balance of the Petty Cash account is a credit.

Indicate which effect(s)each situation will have: 1. New check written 2. Recorded in the general journal 3. Recorded in auxiliary petty cash record 4. Petty cash voucher prepared -________ Bought a book of stamps

Indicate which effect(s)each situation will have: 1. New check written 2. Recorded in the general journal 3. Recorded in auxiliary petty cash record 4. Petty cash voucher prepared -________ Owner withdrew money from the company for personal use

The Petty Cash account should always be debited when the fund is replenished.

A company would use a change fund if: