CB Banking and Cash Management

Question 1

What is the primary purpose of a bank reconciliation?

Accepted Answer

To verify that the company's book cash balance agrees with the bank statement balance

Answer

To record all cash transactions in the general ledger

Answer

To prepare the monthly income statement

Answer

To calculate the company's net income

Question 2

Outstanding checks are best described as checks that have been:

Accepted Answer

Written and recorded by the company but not yet cleared the bank

Answer

Received from customers but not yet deposited

Answer

Returned by the bank due to insufficient funds

Answer

Written but not yet recorded in the company's books

Question 3

Deposits in transit on a bank reconciliation are:

Accepted Answer

Deposits recorded by the company but not yet shown on the bank statement

Answer

Deposits shown on the bank statement but not recorded by the company

Answer

Electronic transfers received directly by the bank

Answer

Deposits that have been rejected by the bank

Question 4

If the bank statement balance is $8,000, outstanding checks total $1,200, and deposits in transit are $500, what is the adjusted bank balance?

Accepted Answer

$7,300

Answer

$8,700

Answer

$9,200

Answer

$6,800

Question 5

A credit memo from the bank appearing on the bank statement typically represents:

Accepted Answer

An increase to the company's bank account balance

Answer

A decrease to the company's bank account balance

Answer

A bookkeeping error made by the company

Answer

A customer check returned for insufficient funds

Question 6

When a bank charges an NSF (non-sufficient funds) fee, the bookkeeper should:

Accepted Answer

Reduce the book balance by recording the fee as an expense

Answer

Increase the bank statement balance by the fee amount

Answer

Record it as miscellaneous income

Answer

Add it to the bank side of the reconciliation only

Question 7

Which of the following is an example of a bank debit memo?

Accepted Answer

A monthly service charge deducted from the account

Answer

Interest credited to the account by the bank

Answer

A customer deposit processed by the bank

Answer

A check that has successfully cleared the bank