Bank Reconciliation

Question 1

The bank statement is a report that is prepared for the purpose of bringing the balances of cash per records and per bank statement into agreement.

(TRUE/FALSE)

Answer 1

FALSE, BANK RECONCILIATION STATEMENT

Question 2

When preparing bank reconciliation, credit memos are added to the balance per bank statement to get the adjusted balance.

(TRUE/FALSE)

Answer 2

FALSE

Question 3

A bank decreased a depositor’s account. To notify the depositor, the bank will issue a credit memo.

(TRUE/FALSE)

Answer 3

FALSE

Question 4

Bank memorandums not recorded by the depositor require reconciling entries in the depositor’s books of accounts.

(TRUE/FALSE)

Answer 4

TRUE

Question 5

A bank statement has a balance of 200. If the credit memos are P20 while the outstanding checks are P10, the adjusted cash balance is P190.

(TRUE/FALSE)

Answer 5

TRUE

Question 6

The ledger balance of cash is P100. If the credit memos are P20, deposits in transit are P20, outstanding checks are P10, and - NSF checks are P5, the adjusted cash balance is P110.

(TRUE/FALSE)

Answer 6

FALSE

Question 7

In a proof of cash, if the June 30 cash balance is P20 while the July cash receipts and disbursements are P10 and P18, respectively, the July 31 cash balance must be P12.

(TRUE/FALSE)

Answer 7

TRUE

Question 8

An entity is preparing a proof of cash for November 30 and December 31. If the unadjusted bank statement balance on November 30 is P30, the unadjusted deposits and withdrawals during December are P5 and P3, respectively, the unadjusted bank statement balance on December 31 must be P28.

(TRUE/FALSE)

Answer 8

FALSE

Question 9

The credit memos from, the previous month are extended to the cash receipts column of a proof of cash as an addition.

(TRUE/FALSE)

Answer 9

FALSE

Question 10

The debit memos from the previous month are extended to the cash disbursements column of a proof of cash as a deduction.

(TRUE/FALSE)

Answer 10

TRUE

Question 11

These are deposits made but not yet credited by the bank to the depositor’s bank account.
a. Credit memos (CM)
b. Debit memos (DM)
c. Outstanding checks (OC)
d. Deposits in transit (DIT)

Answer 11

d. Deposits in transit (DIT)

Question 12

In preparation of bank reconciliation, it was found out that cash sales of ₱9,500 were incorrectly recorded in the books as ₱5,900. What entry is reconciling journal entry?

Answer 12

a. (Dr.) Cash; (Cr.) Accounts Receivable

(Dr.) Cash; (Cr.) sales

(Dr.) Accounts Receivable; (Cr.) Cash

none

Question 13

What is the reconciling entry in the depositor’s books to record outstanding checks?

a. (Dr.) Cash; (Cr.) Accounts Payable
bank has made any.e,
b. (Dr.) Accounts Receivable; (Cr.) Cash
deposits credited
c. (Dr.) Accounts Payable; (Cr.) Cash
company:
d. none

Answer 13

a. (Dr.) Cash; (Cr.) Accounts Payable
bank has made any.e,
b. (Dr.) Accounts Receivable; (Cr.) Cash
deposits credited
c. (Dr.) Accounts Payable; (Cr.) Cash
company:
d. none

Question 14

In a bank recondiation, a note receivable collected by the bank is

a. deducted from the cash balance per bank statement.
b. deducted from the cash balance per ledger.
c. added to the cash balance per bank statement.
d. added to the cash balance per ledger.

Question 15

Which of the following reconciliation items requires an adjusting joural entry in the books of ABC Co.?

a. Amortization of loan of XYZ, Inc. erroneously credited by the bank to ABC Co.’s account.

b. NSF check returned by bank and re-deposited by ABC Co. during the period and appropriately cleared the bank in the same period.

c. Cash deposits made but were not yet credited to ABC Co’s bank account as of cut-off date

d. Customer payments directly remitted to the bank

Question 16

Which of the following may be used to compute for the adjusted balance of cash?

Answer 16

a. Balance per books + Credit memo - Debit memo -
Understatement of cash collections
b. Balance per books + Credit memo - Debit memo +
Overstatement of cash collections
Balance per books + Credit memo - Debit memo +
Overstatement of cash disbursements
Balance per books + Credit memo - Debit memo - d.
Overstatement of cash disbursements

Question 17

1. bank has made any errors, there must be
   a. deposit credited by the bank but not yet recorded by the company.
   outstanding checks.
   C.
   bank charges not yet recorded by the company.
   deposits in transit.

Question 18

Certified checks should be excluded from outstanding checks when preparing bank reconciliation. The rationale for this
treatment is that
a. the bank, when certifying checks, draws the check in its account.
b. the bank, when certifying checks, automatically debits the
depositor’s account.
the bank, when certifying checks, automatically credits the
depositor’s account.
d. the bank, when certifying checks, assumes the obligation to pay the drawee when the check is presented for
payment.

Question 19

When preparing a proof of cash, a credit memo from the
previous month is
a. extended to the book receipts column as an addition.
b. extended to the bank receipts column as an addition.
c. extended to the book receipts colommas a deduction.
d. not extended in any of the book columns.

Question 20

When preparing a proof of cash. an overstated book deit in the previous month is
an extended to the book receipts column as an addition.
b. extended to the book receipts column as an addition.
C.
extended to the book disbursements column
as a
deduction.
d. not included in the proof of cash if the error is already corrected in the current month.