true and false quiz chapter 5

Question 1

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

Answer 1

true

Question 2

When a deposit is made in a bank account, the bank issues a check.

Answer 2

false

Question 3

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

Answer 3

true

Question 4

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

Answer 4

true

Question 5

When writing a check, the first step is to prepare the check.

Answer 5

false

Question 6

Most banks do not look at the date the check is written and will withdraw money from the depositor’s account anytime.

Answer 6

false

Question 7

The amount of a check is written twice on each check

Answer 7

true

Question 8

A check that contains minor errors can be corrected neatly and initialed.

Answer 8

false

Question 9

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

Answer 9

true

Question 10

an outstanding check is one that has not yet been issued

Answer 10

false

Question 11

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

Answer 11

true

Question 12

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.

Answer 12

true

Question 13

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.

Answer 13

true

Question 14

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

Answer 14

false

Question 15

The source document for a debit card purchase is a memorandum.

Answer 15

true

Question 16

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

Answer 16

True

Question 17

Businesses use petty cash when writing a check is not time or cost-effective.

Answer 17

true

Question 18

A petty cash report is completed at the end of each business day.

Answer 18

false

Question 19

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

Answer 19

false

Question 20

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

Answer 20

false