Chapter 7

Question 1

What entries do you make to create a petty cash fund?

Answer 1

Debit Petty Cash, Credit Cash to create a petty cash fund

Question 2

What entries do you make to replenish the petty cash fund?

Answer 2

Debit all expenses, Credit Cash

Question 3

Outstanding deposits are added or subtracted from the bank balance?

Answer 3

Added

Question 4

What happens to outstanding deposits related to the bank balance?

Answer 4

They are added in to the bank balance.

Question 5

Outstanding checks are added or subtracted from the bank balance?

Answer 5

Subtracted

Question 6

What happens to outstanding checks related to the bank balance?

Answer 6

They are subtracted from the bank balance

Question 7

What happens to notes collected by the bank?

Answer 7

They must be added to the book balance

Question 8

Service charges, NSF checks, and understatements of checks are all added or subtracted from the book balance?

Answer 8

They are all subtracted.

Question 9

How do you write journal entries for any additions to the book balance?

Answer 9

By debiting cash, and credit accounts receivable for the amount added to the book balance.

Question 10

How do you write journal entries for any subtractions to the book balance?

Answer 10

You debit the individual subtractions, and then credit the total gross amount as cash.

Question 11

What kind of acct is a sales discount acct?

Answer 11

It is a contra revenue acct