Q1. A $100 petty cash fund has cash of $17 and receipts of $80. The journal entry to replenish the account would include a
a. debit to Cash for $80.
b. credit to Petty Cash for $83.
c. debit to Cash Over and Short for $3.
d. credit to Cash for $80.
Q2. On a bank reconciliation, deposits in transit are
a. added to the bank balance.
b. deducted from the bank balance.
c. added to the book balance.
d. deducted from the book balance.
Q3. Deposits in transit
a. have been recorded on the company's books but not yet by the bank.
b. have been recorded by the bank but not yet by the company.
c. have not been recorded by the bank or the company.
d. are checks from customers which have not yet been received by the company.
Q4. In preparing a bank reconciliation, outstanding checks are
a. added to the balance per bank.
b. deducted from the balance per books.
c. added to the balance per books.
d. deducted from the balance per bank.
Q5. Notification by the bank that a deposited customer check was returned NSF requires that the company make the following adjusting entry:
a. Accounts Receivable
Cash
b. Cash
Accounts Receivable
c. Miscellaneous Expense
Accounts Receivable
d. No adjusting entry is necessary.
Q6. Yenn Company developed the following reconciling information in preparing its September bank reconciliation:
Cash balance per bank, 9/30 $15,000
Note receivable collected by bank 6,000
Outstanding checks 9,000
Deposits in transit 4,500
Bank service charge 75
NSF check 1,200
Determine the cash balance per books (before adjustments) for Yenn Company.
a. $11,775.
b. $19,500.
c. $5,775.
d. $15,000.
Q7. Bank errors
a. occur because of time lags.
b. must be corrected by debits.
c. are infrequent in occurrence.
d. are corrected by making an adjusting entry on the depositor's books.
Q8. Cash equivalents include each of the following except
a. bank certificates of deposit.
b. money market funds.
c. petty cash.
d. U.S. Treasury bills.
Q9. An example of poor internal control is
a. The accountant should not have physical custody of the asset nor access to it.
b. The custodian of an asset should not maintain or have access to the accounting records.
c. One person should be responsible for handling related transactions.
d. A salesperson makes the sale, and a different person ships the goods.
Q10. Cash is defined by IFRS as
a. cash on hand.
b. demand deposits.
c. cash on hand and demand deposits.
d. cash on hand, demand deposits, and highly liquid investments.