Ch 7 - Internal Control and Cash

Question 1

What is a Deposit in transit

Answer 1

Deposit has been recorded on company’s books but have not yet been recorded by bank.

Question 2

What is an outstanding cheque

Answer 2

Cheques that have been issued by the company - recorded in the books but have not yet cleared the bank.

Question 3

What parts are associated with the Bank reconciliation part and would not factor into the book reconciliation?

Answer 3

Deposits in transit

Outstanding cheques

Question 4

What are things that you would debit (add) to your book reconciliation?

What would bring the value down?

Answer 4

EFT collections by bank
Errors in cheques
Interest revenue from bank

Bank service charges for things like cheques
NSF charges

Question 5

A cheque is written to replenish a $150 petty cash fund when the fund has the receipts of $148 and $7 in cash. In recording the cheque:
A) Cash over and short should be debited for $5
B) Cash over and short should be credited for $5
C) Petty cash should be debited for $148
D) Cash should be credited for $148

Answer 5

B) Cash over and short should be credited for $5

Question 6

Suzanne has a balance of $410 in her chequebook at the end of the month. The balance on her bank statement is $500. Reconciling items include deposits in transit of $250, outstanding cheques of $350, and service charges of $10. What is suzannes adjusted cash balance?
A) 390 B) 400 C) 410 D) 500

Answer 6

B

Question 7

A company mistakenly recorded a $348 cheque written in payment of an account as $384. The journal entry required to correct this would be:

Answer 7

Cash 36

Accounts payable 36