Multiple Choice Questions
1. In a bank reconciliation, an EFT cash payment is
a. Deducted from the bank balance.
b. Deducted from the book balance.
c. Added to the book balance.
d. Added to the bank balance.
2. If a bookkeeper mistakenly recorded a $35 deposit as $53, the error would be shown on the bank reconciliation as a
a. $53 deduction from the book balance.
b. $53 addition to the book balance.
c. $18 deduction from the book balance.
d. $18 addition to the book balance.
3. If a bank reconciliation included a deposit in transit of $880, the entry to record this reconciling item would include a
a. Credit to cash for $880.
b. Debit to cash for $880.
c. Credit to prepaid insurance for $880.
d. No entry is required.
4. In a bank reconciliation, interest revenue earned on your bank balance is
a. Deducted from the book balance.
b. Deducted from the bank balance.
c. Added to the bank balance.
d. Added to the book balance.
5. Before paying an invoice for goods received on account, the controller or treasurer should ensure that
a. The company has not already paid this invoice.
b. The company is paying for the goods it ordered.
c. The company is paying for the goods it actually received.
d. All of the above.
6. The Little French Bakery is budgeting cash for 2011. The cash balance at December 31, 2010, was $6,000. The Little French Bakery budgets 2011 cash receipts at $83,000. Estimated cash payments include $36,000 for inventory, $26,000 for operating expenses, and $19,000 to expand the store. The Little French Bakery needs a minimum cash balance of $15,000 at all times. The Little French Bakery expects to earn net income of $78,000 during 2011. What is the final result of the company’s cash budget for 2011?
a. Pay off $14,000 of debt.
b. $7,000 available for additional investments.
c. Must arrange new financing for $7,000.
d. $14,000 available for additional investments.

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December 10, 2012

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