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
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:
Answer: An addition to the book balance
Since the bank already received the EFT, the bank balance is higher; to reconcile, the company must add this amount to its book balance and record it with a journal entry.
After all reconciling items are applied, if the adjusted book balance still does not equal the adjusted bank balance, this most likely indicates:
Answer: An error in the company's books or bank records that must be investigated
Once all legitimate reconciling items are accounted for, any remaining difference signals an error — either in the company's books or on the bank statement — that requires correction.
When a customer's check previously deposited is returned by the bank as NSF, the bookkeeper should record:
Answer: Debit accounts receivable; credit cash
An NSF returned check reverses the original deposit entry: cash is reduced (credited) and accounts receivable is reinstated (debited) because the customer's debt was not satisfied.
A bank lockbox system is primarily designed to:
Answer: Accelerate collection of customer payments and reduce internal handling of incoming checks
A lockbox system routes customer remittances directly to the bank for immediate processing, speeding up cash collection and reducing the risk of internal misappropriation.
In cash management, 'float' refers to:
Answer: The time between when a check is written and when it clears the paying bank
Float is the period during which a check has been issued and recorded by the payer but has not yet been deducted from the payer's bank account.
Which of the following reconciling items requires an adjusting journal entry in the company's books?
Answer: A bank service charge appearing on the bank statement
Bank service charges appear on the bank statement but haven't been recorded in the company's books, so a journal entry debiting expense and crediting cash is required.
A company's book balance shows $10,000 and the bank statement shows $10,500. Which of the following best explains this $500 difference?
Answer: The bank collected a $500 note receivable on the company's behalf and issued a credit memo
A bank credit memo for a note collected increases the bank balance; since the company hasn't recorded it yet, the bank balance is higher until the company makes the corresponding journal entry.