Chapter 5

Question 1

What is cash disbursement?

Answer 1

It is a report listing cash activity paid out on a monthly basis.

Question 2

What is the formula for reconciing the cash account?

Answer 2

beginning cash+cash recepits-cash disbursements=ending cash balance

Question 3

Why would the bank have a record of all cash activity for a property?

Answer 3

Because all activity is processed through the bank-rents are deposited and bills are paid by checks.

Question 4

What is a bank reconcilitaion?

Answer 4

It is a comparison of cash receipts and disbursements by reconciling the edning cash balance to the bank records.

Question 5

Why might the bank show a different cash balance than the one calculated by the building’s accounting department?

Answer 5

Checks may have been written to vendors who were unable to cash them prior to the end of the month.

Question 6

How are cash collections and disbursements categorized for the owner?

Answer 6

Each transaction is assigned a unique code from the chart of accounts.

Question 7

What is a check register?

Answer 7

A detailed summary of all cash receipts.

Question 8

What is a cash expenditures report?

Answer 8

A summary of all cash items disbursed, matched with the corresponding chart of accounts code.

Question 9

What is the general ledger?

Answer 9

It is a report listing all activity in all accounts.

Question 10

What time period does the general ledger cover?

Answer 10

It cover’s the year-to-date.

Question 11

How are amounts transfered to the general ledger?

Answer 11

Cash receipts are transferred to the income accounts as credits and the total receipts are transfered to the cash accounts as debits. Cash disbursements are transferred to the expense account as debits with the total disbursements transferred to the cash accounts as credits.

Question 12

How is a cash basis income statement created?

Answer 12

It is created by creating a temporary file, copying monthly and year to date data to that temporary file, and then reordering the data into the standard cash flow statement format

Question 13

What is a field review and who should perform it?

Answer 13

A review of the building’s financial statements prior to their being released to the building owner. It is typically done by the property manager.

Question 14

What should the field review concentrate on?

Answer 14

It should focus on presentation and classification errors.

Question 15

Describe a general ledger.

Answer 15

It is combined report containing all active accounts from the chart of accounts; these acounts are used to generate financial statements.

Question 16

Fill in the blanks: Cash can come in the form of cash_______, or it can go out in the form of cash______.

Answer 16

receipts

disbursements

Question 17

A field review of a cash basis income statement should concentrate on____________.

Answer 17

presentation and classification errors

Question 18

Employee’s paychecks are usually writtenout of which cash account?

a) operating account
b) central account
c) owner’s account
d) payroll account

Answer 18

d) payroll account

Question 19

The completeness of cash receipts and disbursement journals is verified by performing a(n):

a) field review
b) general ledger review
c) accrual conversion
d) bank reconciliation

Answer 19

d) bank reconciliation

Question 20

The monthly and year-to-date cash activities in the general ledger are copied and ordered to form a:

a) trial balance
b) financial statement
c) disbursement ledger
d) cash basis income statement

Answer 20

d) cash basis income statement

Question 21

Which account typically has a credit balance?

a) cash account
b) bank account
c) income account
d) expense account

Answer 21

c) income account

Question 22

For a month of June, your cash receipts journal reflected activity of $13,437.67 while your cash disbursements journal contained activity totaling $10,297.44. If you beginning cash balance was %5,255.00, what is your ending cash balance?

a) $2,114.77
b) $3,140.23
c) $5,255.00
d) $8,395.23

Answer 22

d) $8,395.23

Question 23

The field review if usually performed by the:

a) property or facility manager
b) field reviewer
c) accounting staff
d) owner

Answer 23

a) property or facility manager