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

A bank reconciliation compares the company's book balance with the bank statement balance to identify and resolve all differences between the two.

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

Outstanding checks have been issued and recorded by the company but have not yet been presented to and processed by the bank.

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 in transit are amounts the company has recorded in its books and sent to the bank, but which haven't yet appeared on the bank statement due to timing.

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

Adjusted bank balance = $8,000 − $1,200 (outstanding checks) + $500 (deposits in transit) = $7,300.

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 bank credit memo increases the depositor's account balance, such as interest earned or a note collected by the bank on the company's behalf.

(CB) Certified Bookkeeper Practice Test

(CB) Certified Bookkeeper Practice Test

CB Banking and Cash Management