Chapter 5- True and False

Question 1

Because cash transactions occur more frquently than other transactions, the chances for making recording errors affecting cash are less

Answer 1

false

Question 2

when a deposit is made in a bank account, the bank issues a receipt

Answer 2

true

Question 3

there are four types of endorsements commonly used: blank, special, orginal, and restrictive

Answer 3

false

Question 4

a check with a blank endorsement can be cashed by anoyone wo has possession of the check

Answer 4

true

Question 5

when writing a check, the first step is to prepare the check stub

Answer 5

true

Question 6

most banks do not look at the date the check is written and will withdraw money from the depositor’s account anytime

Answer 6

false

Question 7

the amount of a check is written twice on each check

Answer 7

true

Question 8

a check that contains errors must be marked with the word VOID and another check must be written

Answer 8

true

Question 9

an important aspect of cash control is verifying that the info on a bank statement and a check book are in agreement

Answer 9

true

Question 10

an outstanding check is one that has been issued but not yet reported on a bank statement by the bank

Answer 10

true

Question 11

banks deduct service charges from customers’ checking accounts without requiring customers to write a check for the amount

Answer 11

true

Question 12

not only do banks charge a fee for hangling a dishonored check, but they also deduct the amount of the check from the account as well

Answer 12

true

Question 13

the journal entry for a payment on account using electronic funds transfer is exactly the same as when the payment is made by check

Answer 13

false

Question 14

the source document for an electronic funds transfer is a memorandum

Answer 14

true

Question 15

the source document for a debit card purchase is a memorandum

Answer 15

true

Question 16

techknow consulting maintains a petty cash fund for making large cash payments without writing checks

Answer 16

false

Question 17

businesses use petty cash when writing a check is not time or cost effective

Answer 17

true

Question 18

a memorandum is the source document for the entry to record establishing a petty cash fund

Answer 18

false

Question 19

anytime a payment is made from the petty cash fund, a petty cash slip is prepared showing proof of a petty cash payment

Answer 19

true

Question 20

when the petty cash fund is replenished, the balance of the petty cash account increases

Answer 20

false