Theories: Multiple Choice

1.Bank overdraft , if material, should be

a.Reported as deduction from current asset section

b. Reported as deduction from cash

c.reported as current liability

d. Netted against cash and a net cash amount reported

2.The petty cash fund account under the imprest fund system is debited

a.Only when the fund is created

b.When the fund is created and every time it is replenished

c.When the fund is created and when the size f the fund is increased

d.When the fund is created and when the fund is decreased

3.If the cash balance in an entity's bank statement is less than the correct cash balance and neither the entity nor the bank has made any error, there must be

a.Deposits credited by the bank but not yet recorded by the entity

b.Outstanding checks

c.Bank charges not yet recorded by the entity

d.Deposits in transit

4.If the cash balance shown in an entity's accounting records is less than the correct cash balance and neither the entity nor the bank has made any error, there must be

a.Deposits credited by the bank but not yet recorded by the entity

b.Outstanding checks

c.Bank charges not yet recorded by the entity

d.Deposits in transit

5.Which is true when a petty cash fund is used?

a.The petty cash fund balance should be reported as investment

b.The reimbursement of the petty cash fund should be credited to the cash account

c.The petty cashier's summary of petty cash payments serves as a journal entry that is posted to the appropriate general ledger account

d.Entries that include a credit to the cash account should be recorded at the time payments from the petty cash fund are made

6.Which of the following should be considered cash?

a.Postdated checks

b.Certificates of deposit

c.Money market checking accounts

d.Money market savings certificates

7.Bank statements provide information about all of the following, except

a.Checks cleared during the period

b.NSF checks

c.Bank charges for the period

d.Errors made by the depositor entity

8.What is the proper accounting treatment for a stale check?

a.Revert back to cash and accounts payable.

b.Revert back to cash and a credit to gain.

c.Ignored

d.Either a or b

9.Which of the following is not a basic characteristic of a system of cash control?

a.Use of a voucher system

b.Combined responsibility for handling and recording cash

c.Daily deposit of all cash received

d.Internal audits at irregular intervals

10.The principal purpose of a voucher system is to provide assurance that

a.all cash receipts are deposited intact in the bank.

b.all cash disbursements are approved before a check is issued.

c.all cash receipts are recorded in the accounting records.

d.all purchase invoices are supported by debit memoranda.