A01 Exam 8 (second set)

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Question 1 (5 points)

The drawee is the __________.

Question 1 options:

	person who writes the check
	bank that drawer has an account with
	the person to whom the check is payable
	the person who reconciles the account

Question 2 (5 points)

A nonsufficient funds check was returned to your company. How does the bank treat this on your bank statement?

Question 2 options:

	It is added to the bank balance.
	It is shown as a debit memo.
	It is shown as a credit memo.
	None of these answers are correct.

Question 3 (5 points)

Which of the following bank reconciliation items would be reflected in a journal entry?

Question 3 options:

	error made by the bank
	outstanding checks
	bank service charges
	deposit in transit

Question 4 (5 points)

A restrictive endorsement on a check __________.

Question 4 options:

	can be further endorsed by someone else
	is the safest endorsement for businesses
	permits the bank to use its best judgment
	None of these answers are correct.

Question 5 (5 points)

The bank statement shows __________.

Question 5 options:

	the beginning bank balance of the cash at the start of the month
	the checks the bank has paid and any deposits received
	any other charges or additions to the bank balance
	All of these answers are correct.

Question 6 (5 points)

From the bank reconciliation no entry was recorded for deposits in transit. This would cause __________.

Question 6 options:

	assets to be overstated
	assets to be understated
	no impact since deposits in transit are already included in the balance per books
	no impact since deposits are not recorded on the books

Question 7 (5 points)

Endorsing a check __________.

Question 7 options:

	guarantees payment
	transfers the right to deposit or transfer cash
	cancels the transaction
	All of these answers are correct.

Question 8 (5 points)

Which item(s. will require a journal entry to update the balance in the Cash account?

Question 8 options:

	checks outstanding and deposits in transit
	bank service charges, note collected by the bank, and deposits in transit
	bank service charges, note collected by the bank, and error made by Accounting Services
	None of these answers are correct.

Question 9 (5 points)

Determine the adjusted cash balance per bank for Santa's Packaging on November 30, from the following information.

Cash balance on the bank statement	$2,350
Customer's check returned—NSF	500
Customer's note collected by the bank	600
Deposits in transit, November 30	1,400
Outstanding checks, November 30	2,650

Question 9 options:

	$1,250
	$1,100
	$1,550
	$1,350

Question 10 (5 points)

How would outstanding checks be handled when reconciling the ending cash balance per the bank statement to the correct adjusted cash balance?

Question 10 options:

	They would be added to the balance of the bank statement.
	They would be subtracted from the balance of the bank statement.
	They would be added to the balance per books.
	They would be ignored.

Question 11 (5 points)

If the written amount on the check does not match the amount expressed in figures, the bank may __________.

Question 11 options:

	pay the amount written in words
	return the check unpaid
	contact the drawer to see what was meant
	All of these answers are correct.

Question 12 (5 points)

The check is written and signed by the __________.

Question 12 options:

	drawer
	drawee
	payee
	payer

Question 13 (5 points)

Advantages of on-line banking include __________.

Question 13 options:

	convenience
	transaction speed
	effectiveness
	All of the above answers are correct.

Question 14 (5 points)

Which item should be added to the company's book balance during the bank reconciliation?

Question 14 options:

	deposit in transit
	check outstanding
	bank service charge
	note collected by the bank

Question 15 (5 points)

Calculate, from the following information the adjusted cash balance at the end of April.

Bank statement ending cash balance	$2,000
General ledger cash balance ending	3,250
Bank monthly service charge	45
Deposits in transit	2,500
Outstanding checks	1,500
NSF check returned with bank statement	205

Question 15 options:

	$3,000
	$4,250
	$4,000
	$5,500

Question 16 (5 points)

Scotch Services received a credit memorandum from the bank. During the bank reconciliation they should __________.

Question 16 options:

	increase their cash account on the company's books
	decrease their cash account on the company's books
	increase the ending cash balance on the bank statement
	decrease the ending cash balance on the bank statement

Question 17 (5 points)

On a bank reconciliation, deposits added to the bank side are called __________.

Question 17 options:

	deposits in transit
	late deposits
	deposits on hold
	outstanding deposits

Question 18 (5 points)

Company policy for internal control should include all of the following EXCEPT for what?

Question 18 options:

	Employees will be rotated.
	Monthly bank statements should be sent to and reconciled by the same employees who authorize payments and write checks.
	The owner (or responsible employee. signs all checks after receiving authorization to pay from the departments concerned.
	At time of payment, all supporting invoices or documents will be stamped "paid."

Question 19 (5 points)

The bank statement included bank charges. On the bank reconciliation, the item is __________.

Question 19 options:

	an addition to the balance per company books
	an addition to the balance per bank statement
	a deduction from the balance per bank statement
	a deduction from the balance per company books

Question 20 (5 points)

A full endorsement on a check __________.

Question 20 options:

	is the same as a blank endorsement
	can be endorsed only by the person or company named in the original endorsement
	is the safest endorsement for businesses
	does none of the above