Mastering Correction Of Accounting Errors Testbank

Section 1-WHERE ERRORS OCCUR AND HOW THEY ARE FOUND 1. How frequently should the bank reconciliation be performed? a. Monthly b. Weekly c. Each time wages are paid to employees d. As frequently as is necessary to find errors 2. At year-end 20X2, you see that no insurance expense was recorded for 20X1. On July 1, 20X1, your company had prepaid a 2-year policy for $4,800, debiting Prepaid Insurance and crediting Cash. Correcting this error requires: a. a prior period adjustment b. a current period adjustment c. both a and b d. neither a nor b 3. Company accounting departments perform periodic reviews to ensure the reliability of company accounting procedures during: a. preparation of the trial balance b. a review of adjusting journal entries c. an external audit d. an internal audit 4. Bad debt expense of $500 recorded as $5,000 is an example of: a. a transposition error b. incorrect use of an estimate c. a classification error d. a slide error 5. GrayCo estimates debt using 2% of net sales, but you discover that this year someone used 4% of net sales. This is: a. a transposition error b. an incorrect estimate c. incorrect use of an accounting principle d. a slide error Mastering Correction ofAccounting Errors Testbank 2 Section 2–THE BANK RECONCILIATION 1. You are performing a bank reconciliation for August 20X1. The balance per bank is $21,863; the ledger Cash balance, $17,250. Outstanding checks are as follows: Check Number Amount 2003 $ 560 2004 910 2008 1,700 2009 2,110 You have also identified the following: • A $13 bank service charge for August • An NSF check for $720 • Check #1996, made out to Local Gas & Electric for $798, was booked as $870 • A $6 charge for your bank’s Web Banking, which the company does use To reconcile the balance per book to the balance per bank will require adjusting the book balance by: a. $661 b. $727 c. $733 d. $648 2. In a bank reconciliation, to adjust for a customer’s NSF check requires: a. increasing the bank balance by the amount b. reducing the bank balance by the amount c. increasing the book balance by the amount d. reducing the book balance by the amount 3. In a bank reconciliation, to adjust for a bank charge for another company's check requires: a. increasing the bank balance by the amount of the check b. reducing the bank balance by the amount of the check c. increasing the book balance by the amount of the check d. reducing the book balance by the amount of the check 4. In a bank reconciliation, to adjust for in incorrect deposit of $1,000 from another company in your account requires: a. increasing the bank balance by the amount of the deposit b. reducing the bank balance by the amount of the deposit c. increasing the book balance by the amount of the deposit d. reducing the book balance by the amount of the deposit 5. In a bank reconciliation, to adjust for the bank’s deducting $980 for a company check that you wrote and booked for $890 requires: a. increasing the book balance by $90