CB Banking and Cash Management 2

Question 1

What is the primary characteristic of an imprest petty cash system?

Accepted Answer

The petty cash fund is maintained at a fixed amount and replenished back to that level

Answer

The petty cash fund increases by a set amount each time it is replenished

Answer

Petty cash can be used for any business expense regardless of size

Answer

The petty cash fund is reconciled only at year-end

Question 2

When replenishing a petty cash fund, the correct journal entry is:

Accepted Answer

Debit various expense accounts; credit cash (checking account)

Answer

Debit petty cash; credit various expense accounts

Answer

Debit cash; credit petty cash

Answer

Debit petty cash; credit accounts payable

Question 3

Which of the following represents the best internal control for handling cash receipts?

Accepted Answer

Separating the duties of receiving cash from recording cash transactions

Answer

Having one trusted employee handle all cash functions for efficiency

Answer

Depositing cash receipts weekly rather than daily

Answer

Keeping cash in a locked drawer and reconciling it monthly

Question 4

A petty cash voucher primarily serves as:

Accepted Answer

Documentation authorizing and recording each petty cash disbursement

Answer

The journal entry used when replenishing the petty cash fund

Answer

The bank reconciliation for the petty cash account

Answer

Authorization for establishing or increasing the petty cash fund

Question 5

For proper internal control, bank reconciliations should be prepared by:

Accepted Answer

An employee independent of cash handling and check-writing functions

Answer

The treasurer who oversees all cash management

Answer

The accounts receivable clerk who posts customer payments

Answer

Any available employee to ensure timely completion

Question 6

What does a 'voided check' mean in bookkeeping?

Accepted Answer

A check that has been intentionally canceled and should not be honored for payment

Answer

A check returned by the bank due to insufficient funds

Answer

A check that has successfully cleared the bank

Answer

A check written payable to cash for zero dollars

Question 7

The Cash Over and Short account is used to record:

Accepted Answer

Small differences between actual cash on hand and the recorded cash balance

Answer

Excess cash deposited into the petty cash fund above its established level

Answer

Customer overpayments on outstanding invoices

Answer

Interest earned on the company's checking account