CAP CAP Banking and Cash Management

Question 1

What is the primary purpose of a bank reconciliation?

Accepted Answer

To ensure the company's cash records agree with the bank statement

Answer

To calculate net income for the period

Answer

To prepare the income statement

Answer

To verify vendor invoices are paid

Question 2

Which item would appear as an addition to the bank balance on a bank reconciliation?

Accepted Answer

Deposits in transit

Answer

Outstanding checks

Answer

NSF checks

Answer

Bank service charges

Question 3

An NSF (Non-Sufficient Funds) check returned by the bank requires the company to:

Accepted Answer

Deduct the amount from the book balance

Answer

Add the amount to the bank balance

Answer

Add the amount to the book balance

Answer

Ignore it until the next period

Question 4

Which of the following is an example of a deposit in transit?

Accepted Answer

Cash deposited on Friday that the bank posts on Monday

Answer

A check written but not yet cashed by the payee

Answer

A bank fee charged at month-end

Answer

A wire transfer received and recorded by the bank only

Question 5

What does a petty cash fund reimburse?

Accepted Answer

Small, routine business expenses paid in cash

Answer

Large capital expenditures

Answer

Payroll advances over $500

Answer

Monthly vendor invoices

Question 6

When replenishing a petty cash fund, the journal entry debits:

Accepted Answer

Various expense accounts and credits Cash

Answer

Petty Cash and credits Cash

Answer

Cash and credits Various Expense accounts

Answer

Accounts Payable and credits Petty Cash