ACC 200 EXAM 3 UPDATED ACTUAL QUESTIONS AND
CORRECT ANSWERS
Question:
1. Bank Reconciliation
Answer:
The process of comparing the bank's balance with the company's balance, and
explaining the differences to make them agree
Question:
2. Bank Statement
Answer:
A company will receive a _______ ______________ from its bank every month (will likely
receive it at the beginning of the month for the previous month - e.g., receive the
bank statement for the month of October on November 3rd)
Question:
3. - The beginning balance for the month (the prior month's
ending balance)
- All credits to the account
- All debits to the account
- The ending balance for the month
Answer:
What does the bank statement indicate:
Question:
4. It increases the account. Cash that it holds for its
customers is a liability to the bank (not an asset).
Examples: Deposits, Credit memoranda (electronic funds
transfer & interest earned)
Answer:
What do credits do for the bank statement?
Question:
5. It decreases the account. When a customer's cash
balance decreases, the bank's liabilities are decreasing.
Examples: Checks, Debit memoranda (Bank service
charges & NSF)
Answer:
What do debits do for the bank statement?
,Question:
6. NSF
Answer:
Occurs when a check deposited by a customer gets returned to the bank because
there was not enough money in the check writer's account to cover the check.
When the bank's customer originally deposits the check, the bank increases the
customer's account balance. When the check gets returned to the bank, the bank
decreases the customer's account balance (because the bank is not receiving the
money for the deposited check).
Question:
7. Independent internal verification
Answer:
Bank reconciliations should be prepared by someone that has no other
responsibilities related to cash. This is a form of ________________ ______________ ______________.
Question:
8. to identify the reasons why the two balances are different
and to determine the correct balance
Answer:
Why do you have to prepare the bank reconciliation?
Question:
9. Time lags and Errors
Answer:
Why are there difference in the two balances?
Question:
10. Time Lags
Answer:
________ _________ that prevent one of the parties from recording the transaction
immediately. Examples:
-Deposits in transit
- Outstanding checks
- Bank memoranda (electronic funds transfer, interest earned, bank service
charge, NSF)
Question:
11. Deposits in transit
Answer:
Deposits recorded in the company's books that haven't cleared the bank yet
, Question:
12. Outstanding checks
Answer:
Checks recorded in the company's books that haven't cleared the bank yet
Question:
13. Bank Memoranda
Answer:
- Debits or credits to the company's account recorded by the bank that haven't
been recorded in the company's books
- Example: Electronic funds transfer, interest earned, bank service charge, NSF
Question:
14. Errors
Answer:
________ by either party in recording the transactions. Often discovered in preparing
the bank reconciliation.
Question:
15. Deposits recorded by the company that haven't cleared
the bank so these need to be added to the balance per
bank
Answer:
How does the deposits in transit affect the balance per bank and the balance per
books?
Question:
16. Checks recorded by the company that haven't cleared
the bank so these need to be subtracted from the
balance per bank
Answer:
How does the outstanding checks affect the balance per bank and the balance
per books?
CORRECT ANSWERS
Question:
1. Bank Reconciliation
Answer:
The process of comparing the bank's balance with the company's balance, and
explaining the differences to make them agree
Question:
2. Bank Statement
Answer:
A company will receive a _______ ______________ from its bank every month (will likely
receive it at the beginning of the month for the previous month - e.g., receive the
bank statement for the month of October on November 3rd)
Question:
3. - The beginning balance for the month (the prior month's
ending balance)
- All credits to the account
- All debits to the account
- The ending balance for the month
Answer:
What does the bank statement indicate:
Question:
4. It increases the account. Cash that it holds for its
customers is a liability to the bank (not an asset).
Examples: Deposits, Credit memoranda (electronic funds
transfer & interest earned)
Answer:
What do credits do for the bank statement?
Question:
5. It decreases the account. When a customer's cash
balance decreases, the bank's liabilities are decreasing.
Examples: Checks, Debit memoranda (Bank service
charges & NSF)
Answer:
What do debits do for the bank statement?
,Question:
6. NSF
Answer:
Occurs when a check deposited by a customer gets returned to the bank because
there was not enough money in the check writer's account to cover the check.
When the bank's customer originally deposits the check, the bank increases the
customer's account balance. When the check gets returned to the bank, the bank
decreases the customer's account balance (because the bank is not receiving the
money for the deposited check).
Question:
7. Independent internal verification
Answer:
Bank reconciliations should be prepared by someone that has no other
responsibilities related to cash. This is a form of ________________ ______________ ______________.
Question:
8. to identify the reasons why the two balances are different
and to determine the correct balance
Answer:
Why do you have to prepare the bank reconciliation?
Question:
9. Time lags and Errors
Answer:
Why are there difference in the two balances?
Question:
10. Time Lags
Answer:
________ _________ that prevent one of the parties from recording the transaction
immediately. Examples:
-Deposits in transit
- Outstanding checks
- Bank memoranda (electronic funds transfer, interest earned, bank service
charge, NSF)
Question:
11. Deposits in transit
Answer:
Deposits recorded in the company's books that haven't cleared the bank yet
, Question:
12. Outstanding checks
Answer:
Checks recorded in the company's books that haven't cleared the bank yet
Question:
13. Bank Memoranda
Answer:
- Debits or credits to the company's account recorded by the bank that haven't
been recorded in the company's books
- Example: Electronic funds transfer, interest earned, bank service charge, NSF
Question:
14. Errors
Answer:
________ by either party in recording the transactions. Often discovered in preparing
the bank reconciliation.
Question:
15. Deposits recorded by the company that haven't cleared
the bank so these need to be added to the balance per
bank
Answer:
How does the deposits in transit affect the balance per bank and the balance per
books?
Question:
16. Checks recorded by the company that haven't cleared
the bank so these need to be subtracted from the
balance per bank
Answer:
How does the outstanding checks affect the balance per bank and the balance
per books?
