Identifying Accounting Comcpets and Practices

Flashcards Chapter 5

because cash transactions occur more frequently than other transactions,there is more chance for making recording errors affecting cash

true

when a deposit is made in a bank account, the bank issues a check

false

there are three types of endorsements commonly used: blank, special, and restrictive

true

A check with a black endorsement can be cashed by anyone who has possession of the check

true

when writing the check, the first step is to prepare the check

false

most banks do not look at the date the check is written and will withdraw money from the depositor's account anytime

false

the amount of a check is written twice on each check

true

a check that contains minor errors can be corrected neatly and initialed

false

an important aspect of cash control is verifying that the information on a bank statement and in a checkbook are in agreement

true

an outstanding check is on that has not yet been issued

false

banks deduct service charges from customers’ checking accounts without requiring customers to write a check for the amount

true

not only do banks charge a fee for handling a dishonored check, but they also deduct the amount of the check from the account

true

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

true

The source document for an electronic funds transfer is a check number

false

the source document for a debit card purchase is a memorandum

true

the purpose of a petty cash fund is to make small cash payments without writing checks

true

Businesses use petty cash when writing a check is neither time nor cost effective

true

a petty cash report Is completed at the end of each business day

false

A memorandum is the source document for the entry to record replenishing the petty cash fund

false

When the petty cash fund is replenished, the balance of the petty cash account increases

false