Accounting 5 - T/F

T

1. Because cash transactions occur more frequently than other transactions, there is more chance for making recording errors affecting cash. (p. 122)

F

2. When a deposit is made in a bank account, the bank issues a check. (p. 123)

T

3. There are three types of endorsements commonly used: blank, special, and restrictive. (p. 124)

T

A check with a blank endorsement can be cashed by anyone who has possession of the check. (p. 124)

F

5. When writing a check, the first step is to prepare the check. (p. 126)

F

6. Most banks do not look at the date the check is written and will withdraw money from the depositor's account anytime. (p. 126)

T

. The amount of a check is written twice on each check. (p. 126)

F

8. A check that contains minor errors can be corrected neatly and initialed. (p. 127)

T

9. An important aspect of cash control is verifying that the information on a bank statement and a checkbook are in agreement. (p. 130)

F

10. An outstanding check is one that has not yet been issued. (p. 130)

T

11. Banks deduct service charges from customers' checking accounts without requiring customers to write a check for the amount. (p. 132)

T

2. Not only do banks charge a fee for handling a dishonored check, but they also deduct the amount of the check from the account, as well. (p. 135)

T

. The journal entry for a payment on account using electronic funds transfer is exactly the same as when the payment is made by debit card. (p. 137)

F

14. The source document for an electronic funds transfer is a check number. (p. 137)

T

15. The source document for a debit card purchase is a memorandum. (p. 138)

T

16. The purpose of a petty cash fund is to make small cash payments without writing checks. (p. 140)

T

17. Businesses use petty cash when writing a check is not time or cost effective. (p. 140)

F

18. A petty cash report is completed at the end of each business day. (p. 143)

F

19. A memorandum is the source document for the entry to record replenishing the petty cash fund. (p. 144)

F

20. When the petty cash fund is replenished, the balance of the petty cash account increases. (p. 145)