Bank Reconciliation quiz #2 Flashcards
Bank Reconciliation quiz #2
You can tap to flip the card.
Control buttons has been changed to "navigation" mode.
1/40Skip to main content
How does a company record interest revenue discovered during reconciliation?
The company records a journal entry to increase cash and recognize the interest income. How does a company record an NSF check discovered during reconciliation?
The company records a journal entry to decrease cash and reverse the previously recorded receipt. What is the effect of an EFT payment on the book balance?
An EFT payment decreases the book balance because it represents an automatic withdrawal. What is the effect of an EFT receipt on the book balance?
An EFT receipt increases the book balance because it represents an automatic deposit. Why is it important to adjust for outstanding checks during reconciliation?
Adjusting for outstanding checks ensures the bank balance reflects checks written but not yet cleared. Why is it important to adjust for deposits in transit during reconciliation?
Adjusting for deposits in transit ensures the bank balance reflects deposits made but not yet processed by the bank. What is the impact of failing to record a service charge in the company's books?
The book balance will be overstated until the service charge is recorded. What is the impact of failing to record interest revenue in the company's books?
The book balance will be understated until the interest revenue is recorded. What is the impact of failing to record an NSF check in the company's books?
The book balance will be overstated because the company has not reversed the uncollected funds. What is the impact of failing to record a bank collection in the company's books?
The book balance will be understated because the company has not recognized the additional cash. What is the impact of failing to record an EFT payment in the company's books?
The book balance will be overstated because the payment has not been deducted. What is the impact of failing to record an EFT receipt in the company's books?
The book balance will be understated because the receipt has not been added. What is the impact of a bank error that overstates the bank balance?
The bank balance must be reduced during reconciliation to correct the error. What is the impact of a book error that understates the book balance?
The book balance must be increased during reconciliation to correct the error. What is the impact of a book error that overstates the book balance?
The book balance must be reduced during reconciliation to correct the error. What is the impact of a bank error that understates the bank balance?
The bank balance must be increased during reconciliation to correct the error. What is the purpose of adjusting entries after completing a bank reconciliation?
Adjusting entries update the company's books to reflect all transactions and corrections identified during reconciliation. What is the effect of not performing regular bank reconciliations?
Not performing regular reconciliations increases the risk of undetected errors, fraud, and inaccurate financial records. How does a company know if a check is outstanding?
A check is outstanding if it has been recorded in the company's books but does not appear as cleared on the bank statement. How does a company know if a deposit is in transit?
A deposit is in transit if it has been recorded in the company's books but does not appear as a deposit on the bank statement. What is the journal entry to record a bank collection discovered during reconciliation?
Debit Cash and credit the appropriate receivable or revenue account. What is the journal entry to record a service charge discovered during reconciliation?
Debit Bank Service Charges (expense) and credit Cash. What is the journal entry to record interest revenue discovered during reconciliation?
Debit Cash and credit Interest Revenue. What is the journal entry to record an NSF check discovered during reconciliation?
Debit Accounts Receivable and credit Cash. What is the journal entry to record an EFT payment discovered during reconciliation?
Debit the appropriate expense or payable account and credit Cash. What is the journal entry to record an EFT receipt discovered during reconciliation?
Debit Cash and credit the appropriate revenue or receivable account. What is the journal entry to correct a book error that understated cash?
Debit Cash and credit the account that was understated. What is the journal entry to correct a book error that overstated cash?
Debit the account that was overstated and credit Cash. What is the main reason for differences between the bank statement and the company's cash records?
Timing differences and errors in recording transactions cause discrepancies. What is the effect of a deposit in transit on the adjusted bank balance?
It increases the adjusted bank balance. What is the effect of an outstanding check on the adjusted bank balance?
It decreases the adjusted bank balance. What is the effect of a bank collection on the adjusted book balance?
It increases the adjusted book balance. What is the effect of a service charge on the adjusted book balance?
It decreases the adjusted book balance. What is the effect of interest revenue on the adjusted book balance?
It increases the adjusted book balance. What is the effect of an NSF check on the adjusted book balance?
It decreases the adjusted book balance. What is the effect of a book error on the adjusted book balance?
The book balance is adjusted up or down depending on the nature of the error. What is the effect of a bank error on the adjusted bank balance?
The bank balance is adjusted up or down depending on the nature of the error. Why is it important to correct both bank and book errors during reconciliation?
Correcting errors ensures the accuracy of both the bank and company records. What is the relationship between deposits in transit and the timing of bank processing?
Deposits in transit occur because there is a delay between when the company records the deposit and when the bank processes it. What is the relationship between outstanding checks and the timing of bank processing?
Outstanding checks occur because there is a delay between when the company issues the check and when the bank clears it.
04:57
