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a. Money only
b. Money and any negotiable instrument
c. Any negotiable instrument
d. Money and any negotiable instrument that is payable in money and
acceptable by the bank for deposit and immediate credit
6. Bank overdraft
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Test bank in Theory of Accounts – Cash and cash equivalents
7. A compensating balance
a. Certificates of deposit
b. Checking accounts
c. Money market savings certificates
d. Post-dated checks
12. The petty cash account under the imprest fund system is debited
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Test bank in Theory of Accounts – Cash and cash equivalents
a. Separation of duties
b. Assignment of responsibility
c. Proper authorization
d. Imprest system
a. Expenses paid with petty cash are recorded when the fund is
replenished
b. Most small amounts are paid from cash receipts before they are
deposited
c. Petty cash is debited when the fund is replenished
d. Petty cash is credited when the fund is replenished
16. When a petty cash fund is sued, which of the following is true?
a. Cash is debited
b. Petty cash is debited
c. Petty cash is credited
d. Expense accounts are debited
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Test bank in Theory of Accounts – Cash and cash equivalents
22. Which of the following items must be added to the cash balance per
ledger in preparing a bank reconciliation which ends with the adjusted
cash balance?
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Test bank in Theory of Accounts – Cash and cash equivalents
23. Which of the following must be deducted from the bank statement
balance in preparing a bank reconciliation which ends with adjusted
cash balance?
a. Deposit in transit
b. Outstanding check
c. Reduction of loan charged to the account of the depositor
d. Certified check
a. Deposits credited by the bank but not yet recorded by the company
b. Outstanding checks
c. Deposits in transit
d. Bank charges not yet recorded by the company
a. Deposits credited by the bank but not yet recorded by the company
b. Outstanding checks
c. Deposits in transit
d. Bank charges not yet recorded by the company
a. Bank service charge will cause the cash balance per ledger to be
higher than that reported by the bank, all other things being
equal
b. Outstanding checks will cause the cash balance per ledger to be
greater than the balance reported by the bank, all other things
being equal
c. An error made by the bank by charging an amount to the
depositor’s account requires a correcting entry in the
depositor’s own records
d. The cash amount shown in the balance sheet must be the balance
reported in the bank statement
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Test bank in Theory of Accounts – Cash and cash equivalents
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Test bank in Theory of Accounts – Cash and cash equivalents
c. A 90-day T-bill
d. A 6-day money market placement
33. As of December 31 of the current year, an entity had various
checks and papers in its safe. Which item should not be in its cash
account in the current year-end balance sheet?
34. Which item should be excluded from cash and cash equivalent on the
current year-end balance sheet of an entity?
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Test bank in Theory of Accounts – Cash and cash equivalents
a. Statement 1 only
b. Statement 2 only
c. Both statements
d. Preferred shares do not qualify as cash equivalent
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Test bank in Theory of Accounts – Cash and cash equivalents
a. Statement 1 only
b. Statement 2 only
c. Both statements
d. None of the statements
a. Statement 1 only
b. Statement 2 only
c. Both statements
d. None of the statements
43. Which of the following items are not normally taken in the cash
balance per ledger to arrive at the adjusted cash balance?
a. Bank error
b. Bank service charge
c. Unrecorded collections made by the bank in behalf of the entity
d. Book error
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