1. Top Drawer Cleaning CC has received a cheque from one of its customers, in payment of...
Question:
1. Top Drawer Cleaning CC has received a cheque from one of its customers, in payment of their account. The cheque has two lines across the top left corner, has “or bearer” crossed out, and has “cash” written on the “pay” line. Geraldine Adams, the sole member of the CC, wishes to exchange to cheque for hard cash at the bank teller, and wants to know whether this will be possible. Which of the following statements is the most correct?
Select one:
a. It will be possible – as the cheque has “cash” written on it, anybody may cash it.
b. It will not be possible – it would have to be made out to her personally to be able to cash it.
c. It will not be possible – as the cheque is crossed, it must be paid directly into an account.
d. It will be possible – as the sole member of the CC, she can perform any function on behalf of the CC.
2. Assuming the business in question is a VAT vendor, when amounts are collected from debtors, is VAT calculated in the cashbook receipts? Why or why not?
Select one:
a. Yes – if the business is a VAT vendor, VAT must always be calculated.
b. No – VAT would already have been calculated at the time of the sale.
c. No – the VAT is only calculated in an adjusting general journal entry.
d. Yes – VAT should only be accounted for on receipt of payment.
