CAP CAP Banking and Cash Management 2

Question 1

Outstanding checks on a bank reconciliation are:

Accepted Answer

Deducted from the bank balance

Answer

Outstanding checks have been recorded by the company as payments but have not yet cleared the bank, so they are deducted from the bank balance.

Question 2

A bank service charge on the bank statement that was NOT recorded in the company's books should be:

Accepted Answer

Deducted from the book balance

Answer

A bank service charge the company hasn't recorded reduces the company's actual cash, so it must be deducted from the book balance.

Question 3

Which internal control practice best safeguards cash receipts?

Accepted Answer

Separating the duties of receiving, recording, and depositing cash

Answer

Segregation of duties prevents any single employee from controlling all aspects of a cash transaction, reducing the risk of theft or error.

Question 4

A company receives a $200 interest credit on its bank statement that it has not yet recorded. This item should be:

Accepted Answer

Added to the book balance

Answer

Interest earned is income the bank has credited but the company hasn't recorded, so it must be added to the book balance to reconcile.

Question 5

What is the purpose of a lock-box system in cash management?

Accepted Answer

To accelerate collection of customer payments through a bank P.O. box

Answer

A lock-box system routes customer remittances directly to a bank P.O. box, allowing the bank to process deposits faster and reduce mail float.

(CAP) Certified Accounting Paraprofessional Practice Test