Internal Control—The Bank
Reconciliation Quick Check
Comprehensive Questions
(Frequently Tested) with
Verified Answers Graded A+
What is petty cash? - Answer: Small amounts of cash kept for miscellaneous purposes
Debit memos from a bank reduce a depositor's cash balance, and credit memos increase the
balance. This seems backwards from the normal debit-and-credit rules. What is the
explanation? - Answer: From a banks perspective, customers deposits are liabilities
What is an "NSF check"? - Answer: A check that is not honored by a bank because of insufficient
cash in the check writer's account
What is a bank reconciliation? - Answer: The process of determining the reasons for the
differences between the bank balance and the company's cash account balance