U1 AOS 2 Revision- Bank Reconciliation Flashcards
(17 cards)
What is the primary purpose of a bank reconciliation?
To ensure that the balances in a company’s accounting records match the balances reported by the bank.
True or False: A bank reconciliation is only necessary when there are discrepancies between the bank statement and the company’s records.
False
Fill in the blank: The bank reconciliation process typically involves comparing the bank statement balance to the __________ balance.
book
Which of the following items may cause differences during bank reconciliation? (A) Unpresented cheque? (B) Deposits in not yet cleared (C) Bank fees (D) All of the above
D) All of the above
What is an unpresented cheque?
A cheque that has been written and recorded in the company’s books but has not yet cleared the bank.
What financial document is compared to the company’s cash records during bank reconciliation?
The bank statement
What is the primary purpose of cash control procedures in a business?
To protect the business’ cash from theft, fraud, and errors.
What is one method businesses use to secure cash during non-business hours?
Using a safe or cash vault.
Which of the following is NOT a common procedure for cash protection? A) Cash audits B) Employee training C) Ignoring discrepancies D) Dual control
C) Ignoring discrepancies
What is the formula for calculating the net profit margin?
Net Profit Margin = (Net Income / Revenue) x 100
Fill in the blank: The _____ ratio measures how much profit a company generates from its total assets.
Return on Assets (ROA)
Which profitability ratio indicates how well a company manages its expenses relative to its revenue?
Net Profit Margin
What is the formula for calculating the debt ratio?
Debt Ratio = Total Liabilities / Total Assets
True or False: A higher debt ratio indicates a company is more leveraged.
True
Fill in the blank: The debt ratio is used to assess a company’s _____ risk.
financial
What are liquidity ratios primarily used for?
To measure a company’s ability to meet its short-term obligations.
Which of the following is NOT a liquidity ratio? A) Current Ratio B) Quick Ratio C) Debt Ratio
C) Debt Ratio
