CB Banking and Cash Management 3

Question 1

An electronic funds transfer (EFT) received by the bank but not yet recorded in the company's books would appear on the bank reconciliation as:

Accepted Answer

An addition to the book balance

Answer

An addition to the bank balance

Answer

A deduction from the bank balance

Answer

A deduction from the book balance

Question 2

After all reconciling items are applied, if the adjusted book balance still does not equal the adjusted bank balance, this most likely indicates:

Accepted Answer

An error in the company's books or bank records that must be investigated

Answer

A large number of outstanding checks

Answer

Multiple deposits in transit

Answer

Normal timing differences between the bank and the company

Question 3

When a customer's check previously deposited is returned by the bank as NSF, the bookkeeper should record:

Accepted Answer

Debit accounts receivable; credit cash

Answer

Debit cash; credit accounts receivable

Answer

Debit bad debt expense; credit cash

Answer

Debit cash; credit bad debt expense

Question 4

A bank lockbox system is primarily designed to:

Accepted Answer

Accelerate collection of customer payments and reduce internal handling of incoming checks

Answer

Securely store important company documents and contracts

Answer

Process outgoing vendor payments more efficiently

Answer

Monitor and restrict employee access to company cash

Question 5

In cash management, 'float' refers to:

Accepted Answer

The time between when a check is written and when it clears the paying bank

Answer

The interest rate earned on funds held in a bank account

Answer

The minimum balance required to avoid bank service charges

Answer

The difference between total outstanding and total cleared checks

Question 6

Which of the following reconciling items requires an adjusting journal entry in the company's books?

Accepted Answer

A bank service charge appearing on the bank statement

Answer

An outstanding check written last month

Answer

A deposit in transit sent to the bank yesterday

Answer

An error on the bank statement that the bank will correct

Question 7

A company's book balance shows $10,000 and the bank statement shows $10,500. Which of the following best explains this $500 difference?

Accepted Answer

The bank collected a $500 note receivable on the company's behalf and issued a credit memo

Answer

There are $500 in outstanding checks not yet cleared

Answer

There is a $500 deposit in transit not yet posted by the bank

Answer

The company recorded a $500 payment twice in error