True/False
Indicate whether the sentence or statement is true
or false.
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1.
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In
accounting, money is usually referred to as cash.
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2.
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Most
businesses make major payments with cash.
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3.
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After
a deposit is recorded on the check stub, a checkbook subtotal is not calculated until the next check
is written.
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4.
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Ownership of a check cannot be transferred.
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5.
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An
endorsement on a check may be either written or stamped.
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6.
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If a
bank does not receive payment from the person who signed the check, each endorser of the check is
individually liable for payment.
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7.
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An
endorsement consisting only of the endorser's signature is a blank endorsement.
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8.
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Blank
endorsements should be used when sending checks through the mail.
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9.
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An
endorsement consisting of the words "Pay to the order of" and a new owner's name is a
special endorsement.
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10.
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A
check with a future date on it is a postdated check.
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11.
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Most
banks will accept postdated checks.
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12.
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Banks
usually refuse to accept altered checks.
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13.
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Voided checks should be recorded in the journal.
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14.
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When
a bank statement is received, the depositor should verify its accuracy immediately.
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15.
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On a
bank statement reconciliation, the adjusted check stub balance must be the same as the adjusted bank
balance.
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16.
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Using
a memorandum as the source document for a dishonored check is an application of the accounting
concept Objective Evidence.
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17.
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The
petty cash fund is a liability with a normal debit balance.
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18.
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As
petty cash is paid out, the amount in the petty cash box decreases.
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19.
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A
signature card for a business's checking account should show only the signature of the business
owner.
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20.
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When
petty cash is replenished, Petty Cash is debited and Cash is credited.
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21.
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Because cash transactions occur more frequently than other transactions, the chances
for making recording errors affecting cash are less.
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22.
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When
a deposit is made in a bank account, the bank issues a receipt.
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23.
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There
are four types of endorsements commonly used: blank, special, original, and
restrictive.
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24.
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A
check with a blank endorsement can be cashed by anyone who has the check.
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25.
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When
writing a check, the first step is to prepare the check stub.
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26.
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Most
banks do not look at the date the check is written and will withdraw money from the depositor's
account anytime.
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27.
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The
amount of a check is written twice on each check.
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28.
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A
check that contains errors must be marked with the word VOID, and another check must be
written.
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29.
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An
outstanding check is one that has been issued but not yet reported on a bank statement by the
bank.
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30.
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An
important aspect of cash control is verifying that the information on a bank statement and in a
checkbook are in agreement.
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31.
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Banks
deduct service charges from customers' checking accounts without requiring customers to write a check
for the amount.
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32.
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Not
only do banks charge a fee for handling a dishonored check, but they also deduct the amount of the
check from the account.
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33.
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The
journal entry for a payment on account using electronic funds transfer is exactly the same as when
the payment is made by check.
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34.
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The
source document for an electronic funds transfer is a memorandum.
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35.
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The
source document for a debit card purchase is a memorandum.
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36.
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A
petty cash fund is used for making large cash payments without writing checks.
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37.
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Using
a petty cash fund usually decreases the number of checks that have to be written.
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38.
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A
memorandum is the source document for the entry to record establishing a petty cash
fund.
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39.
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Anytime a payment is made from the petty cash fund, a petty cash slip is prepared
showing proof of a petty cash payment.
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40.
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When
the petty cash fund is replenished, the balance of the petty cash account increases.
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41.
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A
check is a common business form for ordering a bank to take cash from its checking
account.
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42.
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If
any kind of error is made in preparing a check, a new check should be prepared and the old check
should be thrown away immediately.
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43.
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A
bank reconciliation form is prepared by the bank to ensure that the bank has not made
mistakes.
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44.
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In
order to control cash, one common method is to ensure that cash payments are paid by pre-numbered
checks.
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45.
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A
debit cardholder still must remember to write a check for the purchase even though the debit card has
been used for the purchase.
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46.
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When
a business uses EFT to pay vendors, previous arrangements have been made with its bank to process the
transactions.
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47.
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A
bank requires that the signature of the person authorized to sign checks be on the signature
card.
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48.
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The
petty cash slip is the source document for the entry to replenish petty cash.
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49.
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As
petty cash is paid out, the balance of the petty cash account decreases.
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50.
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The
only difference in the journal entry for a cash payment by check and a cash payment by electronic
funds transfer is the source document.
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Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question.
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51.
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A
business form ordering a bank to pay cash from a bank account is ____. a. | a signature
card | c. | a
check | b. | a deposit slip | d. | none of the above | | | | |
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52.
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A
check must be signed with ____. a. | the same signature as on the signature
card | b. | only the first
and last name | c. | a restrictive endorsement | d. | black
ink | | |
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53.
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Each
time cash or checks are placed in a bank account, the customer prepares ____. a. | a signature
card | c. | a
check | b. | a deposit slip | d. | none of the above | | | | |
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54.
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A
signature or stamp on the back of a check transferring ownership is ____. a. | a signature
card | c. | an
endorsement | b. | a deposit slip | d. | none of the above | | | | |
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55.
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An
endorsement on the back of a check consisting only of a signature is ____. a. | a blank
endorsement | c. | a restrictive
endorsement | b. | a special endorsement | d. | an incorrect endorsement | | | | |
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56.
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A
lost check with a blank endorsement on it can be cashed by ____. a. | anyone who has
the check | b. | only the person whose name follows the words "Pay to the
order of" | c. | only the person who endorsed the
check | d. | no one | | |
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57.
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An
endorsement on the back of a check consisting of the words "Pay to the order of" and a new
check owner's name is a ____. a. | blank endorsement | c. | restrictive endorsement | b. | special
endorsement | d. | signature
endorsement | | | | |
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58.
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An
endorsement on the back of a check indicating that the check is to be accepted for deposit only is a
____. a. | blank
endorsement | c. | restrictive
endorsement | b. | special endorsement | d. | deposit endorsement | | | | |
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59.
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If a
check is endorsed on the back with the words "For deposit only," the check can be cashed by
____. a. | anyone who has
the check | b. | the person whose name follows "Pay to the order
of" | c. | only the person who signed the check | d. | no one - it must
be deposited | | |
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60.
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If
any kind of error is made in preparing a check, ____. a. | a new check
should be prepared | b. | VOID should be written on the check
stub | c. | VOID should be
written on the check | d. | all of the above | | |
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61.
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The
source document for journalizing a bank service charge is ____. a. | a
check | c. | a
memorandum | b. | a receipt | d. | none of the above | | | | |
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62.
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The
source document for journalizing an electronic funds transfer is ____. a. | a
check | c. | a
memorandum | b. | a receipt | d. | none of the above | | | | |
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63.
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The
entry to establish a $200.00 petty cash fund is ____. a. | debit Cash,
$200.00; credit Petty Cash, $200.00 | b. | debit Miscellaneous Expense, $200.00; credit Cash,
$200.00 | c. | debit Petty Cash, $200.00; credit Cash,
$200.00 | d. | debit Petty Cash, $200.00; credit Miscellaneous Expense,
$200.00 | | |
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64.
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A
form showing proof of a petty cash payment is a ____. a. | check | c. | petty cash check
stub | b. | petty cash
slip | d. | journal | | | | |
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65.
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A
petty cash fund is always replenished ____. a. | daily | c. | at the end of the month | b. | weekly | d. | none of the
above | | | | |
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66.
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The
bank statement shows a checking account balance of $5,500.00. There are outstanding checks totaling
$600.00, an outstanding deposit of $400.00, and a bank service charge of $15.00. The checking account
balance should be ____. a. | $5,300.00 | c. | $5,285.00 | b. | $5,700.00 | d. | none of the
above | | | | |
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