Banking and Cash Management Flashcards
7 cards from real CB practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Banking and Cash Management flashcards as text
What is the primary characteristic of an imprest petty cash system?
Answer: The petty cash fund is maintained at a fixed amount and replenished back to that level
Under the imprest system, petty cash is kept at a constant predetermined balance, and the fund is always replenished to restore it to exactly that fixed amount.
When replenishing a petty cash fund, the correct journal entry is:
Answer: Debit various expense accounts; credit cash (checking account)
To replenish petty cash, you debit the appropriate expense accounts for disbursements made and credit the checking account for the total replenishment amount.
Which of the following represents the best internal control for handling cash receipts?
Answer: Separating the duties of receiving cash from recording cash transactions
Segregation of duties ensures no single person controls all aspects of a cash transaction, significantly reducing the risk of theft or undetected error.
A petty cash voucher primarily serves as:
Answer: Documentation authorizing and recording each petty cash disbursement
A petty cash voucher documents the purpose, amount, recipient, and authorization for each payment, providing the supporting evidence required for that disbursement.
For proper internal control, bank reconciliations should be prepared by:
Answer: An employee independent of cash handling and check-writing functions
Bank reconciliations must be performed by someone independent of cash-handling and recording duties to prevent the concealment of errors or fraud.
What does a 'voided check' mean in bookkeeping?
Answer: A check that has been intentionally canceled and should not be honored for payment
A voided check has been deliberately marked 'VOID,' rendering it invalid and ensuring the bank will not accept it for payment.
The Cash Over and Short account is used to record:
Answer: Small differences between actual cash on hand and the recorded cash balance
Cash Over and Short captures minor discrepancies between the actual cash counted and the amount that the records indicate should be present.