Chapter 9

Question 1

Discount Store, a retail business, keeps a $100 change fund in its cash register. If cash Sales were $1200, but cash count showed $1307, then the cash register was:

Answer 1

Over by $7.

Question 2

Upon collection of the amount due on an interest bearing promissory note from a customer, the accountant would Debit Cash, Credit Notes Receivable, and?

Answer 2

Credit Interest Income.

Question 3

The most appropriate form of Endorsement of a check for business services is?

Answer 3

The Restrictive Endorsement.

Question 4

A firm’s bank reconciliation shows, in part, a book balance of $15820, a deposit in transit of $300, an NSF check of $400, outstanding checks totaling $10000, and a service charge of $20. Its adjusted book balance is?

Answer 4

$15400

Question 5

A check issued for $890 to pay for a vendor on account was recorded in the firm’s records as $980; the canceled check was properly listed on the bank statement at $890. To arrive at an accurate balance on a bank reconciliation statement, the error should be?

Answer 5

Added to the book balance.

Question 6

If a check written by a firm is not canceled by the bank and returned with the month’s bank statement, the firm should?

Answer 6

Consider this check as outstanding when preparing the bank reconciliation.

Question 7

A financial instrument whose ownership can be transferred to another person or business is best described as:

Answer 7

Negotiable.