Chapter 5

Question 1

1. A bank account from which payments can be ordered by a depositor

Answer 1

Checking Account

Question 2

2. A bank form which lists the checks, currency, and coins an account holder is adding to the bank account.

Answer 2

deposit slip

Question 3

3. A signature or stamp on the back of a check, transferring ownership.

Answer 3

Endorsement

Question 4

4. An endorsement consisting only of the endorser’s signature.

Answer 4

Blank Endorsement

Question 5

5. An endorsement indicating a new owner of a check.

Answer 5

Special Endorsement

Question 6

6. An endorsement restricting further transfer of a check’s ownership

Answer 6

Restrictive Endorsment

Question 7

7. A check with a future date on it.

Answer 7

Postdated Check

Question 8

8. A check that cannot be processed because the maker has made it invalid

Answer 8

Voided Check

Question 9

9. A report of deposits, withdrawals, and bank balances sent to a depositor by a bank.

Answer 9

Bank Statement

Question 10

10. A check which has been paid by the bank

Answer 10

Canceled Check

Question 11

11. A check that a bank refuses to pay.

Answer 11

Dishonored Check

Question 12

12. A check dishonored by the bank because of insufficient funds in the account of the maker of the check.

Answer 12

NSF Check

Non-sufficient funds

Question 13

13. A computerized cash payments system that transfers funds without the use of checks, currency, or other paper documents.

Answer 13

Electronic Funds Transfer

Question 14

14. A bank card that automatically deducts the amount of a purchase from the checking account of the cardholder

Answer 14

Debit Card

Question 15

15. An amount of cash kept on hand and used for making small payments.

Answer 15

Petty Cash

Question 16

16. A form showing proof of a petty cash payment

Answer 16

Petty Cash Slip

Question 17

17. A petty cash on hand amount that is less than a recorded amount.

Answer 17

Cash Short

Question 18

18. A petty cash on hand amount that is more than a recorded amount.

Answer 18

Cash Over

Question 19

True or False: 1. Because cash transactions occur more frequently than other transactions, there is more chance for making recording errors affecting cash.

Answer 19

True

Question 20

True or False: 2. When a deposit is made in a bank account, the bank issues a check

Answer 20

False:

Question 21

True or False: 3. There are three types of endorsements commonly used: blank, special, and restrictive.

Answer 21

True

Question 22

True or False: 4. A check with a blank endorsement can be cashed by anyone who has possession of the check.

Answer 22

True

Question 23

True or False: 5. When writing a check, the first step is to prepare the check.

Answer 23

False

Question 24

True or False: 6. Most banks do not look at the date the check is written and will withdraw money from the depositor’s account anytime.

Answer 24

False

Question 25

True or False: 7. The amount of a check is written twice on each check.

Answer 25

True

Question 26

True or False: 8. A check that contains minor errors can be corrected neatly and initialed.

Answer 26

False

Question 27

True or False: 9. An important aspect of cash control is verifying that the information on a bank statement and a checkbook are in agreement

Answer 27

True

Question 28

True or False: 10. An outstanding check is one that has not yet been issued.

Answer 28

False

Question 29

True or False: 11. Banks deduct service charges from customers' checking accounts without requiring customers to write a check for the amount.

Answer 29

True

Question 30

True or False: . 12. Not only do banks charge a fee for handling a dishonored check, but they also deduct the amount of the check from the account, as well.

Answer 30

True

Question 31

True or False: 13. The journal entry for a payment on account using electronic funds transfer is exactly the same as when the payment is made by debit card.

Answer 31

True

Question 32

True or False: 14. The source document for an electronic funds transfer is a check number.

Answer 32

False

Question 33

True or False: 15. The source document for a debit card purchase is a memorandum.

Answer 33

True

Question 34

True or False: 16. The purpose of a petty cash fund is to make small cash payments without writing checks.

Answer 34

True

Question 35

True or False: 17. Businesses use petty cash when writing a check is not time or cost effective.

Answer 35

True

Question 36

True or False: 18. A petty cash report is completed at the end of each business day.

Answer 36

False

Question 37

True or False: 19. A memorandum is the source document for the entry to record replenishing the petty cash fund.

Answer 37

False

Question 38

True or False: 20. When the petty cash fund is replenished, the balance of the petty cash account increases.

Answer 38

False