7-1

Chapter 7, TEST 7B

Name ______

Date ______

SCORING RECORD

Section / Total Possible / Deductions / Student
Score
A / 30
B / 30
C / 10
D / 30
Total / 100

Section A

DIRECTIONS: Each of the following statements is true or false. Indicate your choice by writing in the Answers column T for a true answer or F for a false answer. (2 points for each correct answer)

For

Answers Scoring

  1. To a business, cash includes currency, coins,

checks, drafts, and money orders. ______

  1. On a deposit ticket, checks must be listed in

numerical order. ______

  1. The bank reconciliation is prepared by the bank

once a month. ______

  1. A set of procedures designed to insure proper

accounting for transactions is internal control. ______

  1. A blank endorsement means that the check is

payable to any bearer. ______

  1. On any given day, it is unlikely that the balance

in the cash account on the depositor's books will

be the same as the bank balance. ______

  1. It is not necessary to complete the check stub. ______
  2. A petty cash voucher needs to be prepared

for every payment from the Petty Cash fund. ______

  1. When it is necessary to replenish the Petty Cash

fund, the cashier prepares a statement of

payments. ______

  1. The Petty Cash fund should only be replenished

at the end of each accounting period so that the

accounts are brought up-to-date. ______

  1. Businesses commonly use cash registers with tapes

that accumulate a record of the day's cash

receipts. ______

  1. The Change Fund is debited when the change fund is

initially set up. ______

  1. If, at the end of the fiscal year, the Cash Short

and Over has a debit balance, the balance

represents an expense. ______

  1. Most banks now make automated teller machines

(ATM's) available at all times to depositors for

making deposits and withdrawals. ______

15.Checks issued during the bank statement period

that have been presented to the bank for payment

before the statement is prepared are not

sufficient funds checks.______

Section B

Directions: Complete each of the following statements by writing in the Answers column the letter of the word or words that correctly completes each statement. (3 points each)

For

Answers Scoring

  1. To sign the back of a check with just the name

of the payee is an example of: (A) blank

endorsement; (B) signature card (C) restrictive

endorsement; (D) a canceled check

(E) a legal requirement. ______

  1. A check involves three parties. The person

directed to receive the money is called the:

(A)drawer; (B) drawee; (C) payee; (D) depositor;

(E) cashier. ______

  1. Checks issued during the period that have

been presented to the bank for payment and

have been paid during the period are known as:

(A) postdated checks; (B) cancelled checks;

(C) checks in transit; (D) dishonored checks;

(E) returned checks. ______

  1. A bank statement lists: (A) the company’s errors

made during the period; (B) the owner’s bank

account balance at the end of the period; (C) all

checks written by the company; (D) deposits and

other amounts added; (E) all of these. ______

  1. To reconcile the bank statement, the following

amount(s) would be subtracted from the bank

statement balance: (A) interest earned;

(B)outstanding checks; (C) deposits in transit;

(D)amounts collected by the bank for the

depositor's account; (E) loans. ______

  1. In reconciling a bank statement, it was

discovered that an ATM withdrawal by the owner

had not been recorded. She used the cash for

personal purposes. The journal entry for this

transaction would: (A)credit Cash and debit

Miscellaneous Expense; (B) debit Cash and credit

Capital; (C)debit Accounts Receivable and credit

Cash; (D)debit Drawing and credit Cash;

(E) none of these. ______

  1. A debit to Accounts Receivable for $100 and

a credit to Cash for $100 would be an accurate

journal entry to record: (A) An ATM withdrawal;

(B) NSF check; (C) Petty Cash; (D) Cash short

and Over; (E) a sale. ______

  1. The petty cash payments record lists expenditures of:

Gas Expense, $40; Supplies, $24; Miscellaneous

Expense, $10; Postage Expense, $12. The

transaction would include the following debit(s):

(A)Gas Expense; (B) Supplies; (C) Postage

Expense; (D) Miscellaneous Expense; (E) all

of these. ______

  1. To establish a petty cash fund, the account

Debited is: (A) Cash; (B) Petty Cash;

(B)Miscellaneous Expense; (D) Revenue; (E) Loan

Payable. ______

  1. When the Cash Short and Over account has a credit

balance at the end of the month, it is considered:

(A)an expense; (B) an asset; (C) revenue;

(D) a liability; (E) net income. ______

Section C

DIRECTIONS: From the information provided below, prepare the journal entry required for each day’s cash receipts. (10 points total)

Date / Change Fund / Receipts per
Cash Register Tapes / Actual Cash
Counted
June 2 / 100.00 / 420.30 / 520.30
June 4 / 100.00 / 630.40 / 728.62
GENERAL JOURNAL
DATE / DESCRIPTION / POST
REF / DEBIT / CREDIT

Section D

DIRECTIONS: Jackson’s Bait Shop deposits all receipts in the bank and makes all payments by check. On July 31, the cash account had a balance of $22,164.08. The bank statement on July 31 reported a balance of $16,506.30. Upon comparing the bank statement to the books, the following were found. Prepare a bank reconciliation as of July 31. (30 points total)

  1. A bank debit memo of $179 issued for an NSF check from a customer.
  2. A bank credit memo of $34 issued for interest earned during the month.
  3. On July 29, a deposit of $4,744 was made. This deposit is not shown on the bank statement.
  4. A bank debit memo for $65 issued for bank service charges.
  5. Checks for the amounts of $350, $44, $34.80 were written during July but have not yet cleared the bank.
  6. The reconciliation from the previous month, June, showed outstanding checks of $685.00. A check for $29.50 has not yet been

received by the bank.

  1. It was discovered that a check written to a creditor in the amount of $1,291.20 (correct) was recorded on the books as $129.12.