CAP CAP Banking and Cash Management 1

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

A bank reconciliation identifies and explains differences between the company's cash book balance and the bank statement balance.

Question 2

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

Accepted Answer

Deposits in transit

Answer

Deposits in transit have been recorded by the company but not yet processed by the bank, so they are added to the bank balance.

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

An NSF check reduces the company's book balance because the previously recorded cash receipt is no longer collectible from the bank.

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 deposit in transit is cash the company has recorded and submitted to the bank but that has not yet appeared on the bank statement.

Question 5

What does a petty cash fund reimburse?

Accepted Answer

Small, routine business expenses paid in cash

Answer

A petty cash fund is established to pay minor, routine expenses without writing a formal check for each transaction.

(CAP) Certified Accounting Paraprofessional Practice Test