Exam 6: Banking Procedure and Control of Cash

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement on which the account balance is reported, and in Column 4 the nature of the account (permanent/temporary). Example: -

Indicate which effect(s) each situation will have: -________ Establishment of petty cash

Deposits in transit result because of a timing difference between the bank records and checkbook records.

The drawee of the check is the person receiving the money.

An employee assigned the responsibility for overseeing the petty cash fund is called the Accounts Receivable clerk.

The entry to replenish the petty cash fund included a debit to Equipment instead of Supplies for the purchase of supplies. This would cause:

List at least five company policies that would be included in an internal control system.

List and describe some of the electronic conveniences that we are now provided when doing our banking.

If the ending balance in the Cash Short and Over account is a credit, it indicates that cash shortages have exceeded cash overages for the period.

If a check marked NSF is returned from the bank, an adjusting entry crediting Cash is needed.

Determine the cash shortage given the following: The balance per the petty cash account $200 The count of coin and currency amounts to $120 There are receipts: for telephone costs of $25, for supplies of $6, for transportation $6, for funeral flowers $38 $ ________

Petty Cash is an asset shown on the income statement.

The bank statement included bank charges. On the bank reconciliation, this item is:

The May bank statement for Consulting Services shows a balance of $7,200, but the balance per books shows a cash balance of $9,100. Other information includes: 1. A check for $170 to pay the electric bill was recorded on the books as $20. 2) Included on the bank statement was a note collected by the bank for $450 plus interest of $30. 3) Checks outstanding totaled $290. 4) Bank service charges were $60. 5) Deposits in transit were $2,460. Which item should be added to the company's book balance during the bank reconciliation?

The person or company to whom a check is payable is called the:

Endorsing a check:

The May bank statement for Tax Services shows a balance of $5,700, but the balance per books shows a cash balance of $7,200. Other information includes: 1. A check for $200 to pay the electric bill was recorded on the books as $30. 2) Included on the bank statement was a note collected by the bank for $440 plus interest of $20. 3) Checks outstanding totaled $270. 4) Bank service charges were $50. 5) Deposits in transit were $2,010. Which item(s) should be subtracted from the balance per books?

Using correct cash handling procedures, deposits should be made by the end of the week.

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement on which the account balance is reported, and in Column 4 the nature of the account (permanent/temporary). Example: -

Cash Short and Over is: