Intacc 1 - Theories

if the balance shown in the bank statement is less than the correct cash balance and neither the entity nor the bank has made any errors , there must be

• deposits in transit

• bank charges not yet recorded by the depositors

• deposits credited by the bank but not yet recorded by the depositors

• outstanding checks

which statement in relation to bank reconciliation is true?

• outstyanding checks will cause the cash balance per ledger to be gtreater than the balance reported by the bank, all other things being equal

• the cash amount reported in the statement of financial position must be the balance reported in the bank statement

• credit memos will cause the cash balance per ledger to be higher than that reported by the bank , all other things being equal

• bank service charge will cause the cash balance per ledger to be higher than that reported by the bank, all other things being equal

foreign bank deposits that are subject to foreign exchange restrictions should

• be written off as a loss

• be classsified as a current asset with adequate disclosure

• be classified as a non-current asset with adequate disclosure

• form part of cash

under the imprest fund system, the petty cash fund account is credited

• when the funds size is decreased

• when the funds size is decreased and when the fund is not replenished but adjusted prior to the preparation of financial statements

• when the fund is not replenished but adjusted prior to the preparation of financial statements

• when the fund is replenished

Statement 1: Deposit in transit,sometimes, can be used as a book reconciling item.

Statement 2: an accountant may leave book and bank balances unequal with each other provided that the difference is immaterial

Statement 3: Timing difference serves as one of the reasons why most of the time bank balance is not equal with book balance

Statement 4: errors committed by an employee of the company in recording cash transactions may form part of the bank reconciling items

• true,false,true,false

• true,true,true false

• false,false,true,false

• false,true,true,false

which of the following states the importance of proof of cash?

• discovering the time lag in making deposits

• discovering cash receipts that have not been recorded in the journal

• discovering cash receipts that have been recorded but have not been deposited

• both a and b

which of the following items must be added to the cash balance per ledger in preparing bank reconciliation to arrive at the adjusted cash balance?

• erroneous book credit

• erroneous bank credit

• bank service charge

• NSF customer check

a cash short and over account

• is not generally accepted

• is debited when the petty cash fund proves out over

• is debited when the petty cash fund proves out short

• is a contra account to cash

which of the following is correct about erroneous bank credit?

• cash receipts per book is understated

• cash receipts per bank is understated

• cash receipts per book is overstated

• cash receipts per bank is overstated

which statement in relation to the cash short or over account is true?

• the entry to account for daily cash sales for which a small amount of cash shortage existed would include a debit to cash short or over account

• if the cash short or over account has a debit balance at the end of the period it must be debited to an expense account

• a credit balance in a cash short or over account shall be considered a liability because the short changed customer will demand return of this amount

• it would be impossible to have cash shortage or overage if employees were paid in cash rather than by check