Kathryn’s account is not in overdraft.

When preparing the bank reconciliation she

found that the bank had incorrectly debited her account with $120.  The proper
procedure is to:
Select one:
a. Deduct $120 from the bank balance in the general ledger and notify the bank
b. Add $120 to the bank statement balance in the bank reconciliation and notify
the bank 
c. Do nothing as the bank will adjust the error when it balances.

d. Deduct $120 from the bank balance in the general ledger

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The correct answer is: Add $120 to the bank statement balance in the bank
reconciliation and notify the bank

Question 2
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Which of these is not a principle of internal control?

Select one:
a. Appointing an external auditor
b. Separation of record keeping and custody of assets
c. Placing excess cash on fixed deposit to earn interest 

d. Division of responsibility for related transactions

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The correct answer is: Placing excess cash on fixed deposit to earn interest

Question 3
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Question text

Storyboard Ltd had an unadjusted bank account ledger balance at 31 May of

$800 Dr. The bank statement at the same date showed a balance of $1090 Cr.
Bank service charges for the month were $10 and outstanding cheques totalled
$400. The bank statement revealed that the bank had collected dividends for the
firm of $50 and a deposit of $150 is not yet recorded on the statement. What is
the corrected bank account ledger balance at 31 May?
Select one:
a. $1090
b. $840 
c. $990

d. $440

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The correct answer is: $840

Question 4
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Which of these is not a broad principle of cash management that helps ensure
that a business remains solvent?
Select one:
a. Invest any cash that is surplus to requirements to earn a return for the
business 
b. Collect cash owing from accounts receivable as quickly as possible
c. Buy all capital equipment on hire purchase

d. Pay accounts payable just before the due date rather than when the
statement is first received

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The correct answer is: Buy all capital equipment on hire purchase

Question 5
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The Cash Short and Over ledger account, which records the difference between
the total of the cash register tape and the actual cash counted from the register,
is:
Select one:
a. Appears on the Balance Sheet as liability
b. Closed to the Profit and Loss Summary account 
c. Included in the bank reconciliation

d. Deducted from the Bank account balance in the ledger

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The correct answer is: Closed to the Profit and Loss Summary account

Question 6
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When reconciling a bank account with a positive balance, bank fees and interest
charged by the bank are:
Select one:
a. Deducted from the general ledger bank balance 
b. Added to the general ledger bank balance
c. Deducted from the bank statement balance in the reconciliation

d. Added to the bank statement balance in the reconciliation

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The correct answer is: Deducted from the general ledger bank balance

Question 7
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Assuming the account is not in overdraft, when reconciling the ledger with the
bank statement a deposit in transit should be:
Select one:
a. Added to the general ledger bank balance
b. Added to the bank statement balance in the reconciliation 
c. Subtracted from the general ledger bank balance

d. Subtracted form the bank statement balance in the reconciliation

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The correct answer is: Added to the bank statement balance in the reconciliation

Question 8
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The entry at the end of the month to reimburse the petty cash for the amount
spent is:
Select one:
a. Debit petty cash asset; credit petty cash expenses
b. Debit petty cash asset; credit bank
c. Debit petty cash expenses; credit bank 

d. Debit bank; credit petty cash asset

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The correct answer is: Debit petty cash expenses; credit bank
Question 9
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The 30 April bank reconciliation of M Co was prepared using the information

below:
Outstanding deposit $1 000
Ledger bank balance $2 700 Dr (adjusted)

Unpresented cheques $620

What was the bank statement balance at 30 April?

Select one:
a. $4 320 Cr
b. $2 320 Dr
c. $3 080 Dr

d. $2 320 Cr 

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The correct answer is: $2 320 Cr

Question 10
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Which of these is not an essential feature of the imprest petty cash system?

Select one:
a.
Replenishment of the fund for the exact amount spent in
the period.
b. Deciding on a fixed sum that becomes the imprest amount or 'float'.
c. Several people being authorised to reimburse expenses. 

d. Cash in the fund together with vouchers always equalling the imprest amount.

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Your answer is correct.

The correct answer is: Several people being authorised to reimburse expenses.

The municipality of Stonybank had an unadjusted ledger bank balance at 31

March of $28 000 Dr. The bank statement for the month shows a balance of $16
300 Cr.  It also shows bank charges of $255 and dividends directly paid into the
bank of $500.  Deposits not yet credited are $14 545 and unpresented cheques
are $2 600. What is the cash at bank ledger balance at 31 March?
Select one:
a. $39 945
b. $40 190
c. $23 045

d. $28 245 

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The correct answer is: $28 245

Question 2
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When reconciling the bank ledger account and the bank

statement, if both are in overdraft, unpresented cheques will
be:

Select one:
a. added to the general ledger bank balance.
b. added to the bank statement balance in the reconciliation. 
c.
deducted from the general ledger bank balance.

d.
deducted from the bank statement balance in the
reconciliation.

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Your answer is correct.

The correct answer is: added to the bank statement balance in the reconciliation.

Question 3
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 Becker Carpets makes all sales on credit with 50% of the payment received in
the month of sale, 40% in the month following the sale and the remaining 10%
in the subsequent month.
                        Budgeted sales are as follows:
                        January                                                $100 000
                        February                                              $140 000
                        March                                                  $120 000
            The budgeted receipts from debtors during March are:
Select one:
a. $96 000
b. $116 000
c. $126 000 

d. $120 000

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The correct answer is: $126 000

Question 4
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The cornerstone of the internal control of cash is:

Select one:
a. A petty cash system
b. The double entry accounting system
c. A strong safe

d. The bank reconciliation 

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The correct answer is: The bank reconciliation

Question 5
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The correct order in which the steps in the bank reconciliation process occur is:
1. Tick off the items in the prior reconciliation with the bank statement
2. Prepare the bank reconciliation
3. Tick off the cash journals with the bank statement
4. Update the cash journals with unticked items from the bank statement
Select one:
a. 1, 4, 3, 2
b. 1, 3, 4, 2 
c. 4, 3, 2, 1

d. 1, 2, 3, 4

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The correct answer is: 1, 3, 4, 2

Question 6
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The bank statement of a business shows an overdraft of $10 000 at 31 March. In

reconciling the account at that date indicate the treatment you would give to
Cheque No. 461 for $30 that was drawn on 25 March but had not yet been
presented for payment.
Select one:
a. Subtract from the bank statement balance in the bank reconciliation
b. Record in the cash receipts journal
c. Record in the cash payments journal

d. Add to the bank statement balance in the bank reconciliation 

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The correct answer is: Add to the bank statement balance in the bank
reconciliation

Question 7
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 If the petty cash fund was not reimbursed at the time the financial statements
were prepared:
Select one:
a. Petty cash asset would be overstated and expenses understated
b. Expenses would be overstated and petty cash asset would be understated
c. Expenses would be understated and equity overstated 

d. Petty cash expenses would be overstated and bank would be understated

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The correct answer is: Expenses would be understated and equity overstated

Question 8
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Chong Inc makes all of its purchases on credit; 50% are paid in the month of
purchase; 30% during the month following the purchase and 20% in the second
month following the purchase. Given the following data, determine the cash paid
to creditors during month three.
                        Month                            1                                2              
3
                        Credit Purchases           $70 000                    
$50 000                       $80 000
Select one:
a. $50 000
b. $69 000 
c. $55 000

d. $80 000

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The correct answer is: $69 000

Question 9
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 When reconciling the ledger with the bank statement (assuming a positive bank
balance) a returned (dishonoured) cheque should be:
Select one:
a. Added to the general ledger bank balance
b. Subtracted from the bank statement balance
c. Subtracted from the general ledger bank balance 

d. Added to the bank statement balance in the reconciliation

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The correct answer is: Subtracted from the general ledger bank balance

Question 10
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Which statement relating to dishonoured cheques is true?

Select one:
a. They appear as credits on the bank statement
b. They are cheques from debtors deposited into the firm's bank account but not
paid by the drawer's bank due to lack of funds or for other reasons 
c. They must be listed in the bank reconciliation

d. They can be adjusted for by making a negative entry in the sales journal

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The correct answer is: They are cheques from debtors deposited into the firm's
bank account but not paid by the drawer's bank due to lack of funds or for other
reasons