FINANCIAL- ACCOUNTING ACTUAL 2025 QUESTIONS
AND ANSWERS WITH CORRECT VERIFIED SOLUTIONS.
⫸ benefits of EFT. Answer: -speed up collections
-company receives EFT's immediately
-because these payments are deposited directly into the company's bank account, EFT's
eliminate the need for some internal controls
⫸ cash payments. Answer: cash payments:
1. writing a check or completing an EFT to a supplier
2. paying employees via EFT
⫸ goal for internal control of cash payments. Answer: to ensure that the business pays only for
properly authorized transactions.
⫸ voucher system. Answer: a process for approving and documenting all purchases and
payments on account.
-voucher: a collection of documents prepared at each step in the system.
-at each step, employee responsibilities are limited to specific tasks that occur only after
obtaining and documenting proper authorization in the prior step.
⫸ cash paid to employees via EFT. Answer: directly deposit paycheck to employees using EFT
-company initiates EFT when it instructs the bank to transfer the net pay due to each employee
directly from the company's bank account to each employee's checking account.
-positive because it eliminates the task of writing and distributing checks and employee has
access to check without having to make a deposit
-negative is that bank might accidentally over/underpay an employee by transferring wrong
amt of money out of company's bank account.
⫸ imprest system. Answer: a process that controls the amount paid to others by limiting the
total amount of money available to be transferred.
, -company instructs bank to transfer the total net pay of all employees for the pay period out the
the company's general bank account and into a special payroll account established for that
purpose.
-the bank then transfers the individual amounts from the payroll account to the employees
checking accounts.
⫸ how banks help businesses control cash. Answer: 1. restricting access- banks provide a
secure place to deposit cash so businesses need to keep only a limited amount of cash on hand
which reduces the risk that it will be stolen or misplaced.
2. documenting procedures- by processing payments made by check or EFT, banks facilitate and
document business transactions.
3. independently verifying- company accountants use a statement of account prepared by the
bank to double-check the accuracy of cash records. compare these two sets of records and
investigate any differences to verify that a company's records are accurate.
⫸ bank reconciliation. Answer: an internal report prepared to verify the accuracy of both the
bank statement and the cash accounts of a business or individual.
-key internal control because it provides independent verification of all cash transactions that
the bank has processed for the company.
-procedure done monthly by a company employee whose duties are segregated from recording
and handling cash.
⫸ bank statement. Answer: for every bank account that a business opens, the bank generates a
statement that it makes available online.
1. overall summary of activity in the account (dates)
2. a list of specific transactions posted to the account (checks cleared, deposits made, other
transactions)
3. running balance in the account (daily balance)
⫸ checks cleared on bank statement. Answer: 1. after the check is written the payee deposits
the check to a financial institution
2. that financial institution contacts the check writers bank, which intern withdraws the amount
of the check from the check writers account and reports it as a deduction on the bank statement
3. the check is then said to have cleared the bank
-checks listed on bank statement in the order they clear
⫸ deposits made on bank statement. Answer: -deposits are listed on the bank statement in the
order in which the bank processes them
AND ANSWERS WITH CORRECT VERIFIED SOLUTIONS.
⫸ benefits of EFT. Answer: -speed up collections
-company receives EFT's immediately
-because these payments are deposited directly into the company's bank account, EFT's
eliminate the need for some internal controls
⫸ cash payments. Answer: cash payments:
1. writing a check or completing an EFT to a supplier
2. paying employees via EFT
⫸ goal for internal control of cash payments. Answer: to ensure that the business pays only for
properly authorized transactions.
⫸ voucher system. Answer: a process for approving and documenting all purchases and
payments on account.
-voucher: a collection of documents prepared at each step in the system.
-at each step, employee responsibilities are limited to specific tasks that occur only after
obtaining and documenting proper authorization in the prior step.
⫸ cash paid to employees via EFT. Answer: directly deposit paycheck to employees using EFT
-company initiates EFT when it instructs the bank to transfer the net pay due to each employee
directly from the company's bank account to each employee's checking account.
-positive because it eliminates the task of writing and distributing checks and employee has
access to check without having to make a deposit
-negative is that bank might accidentally over/underpay an employee by transferring wrong
amt of money out of company's bank account.
⫸ imprest system. Answer: a process that controls the amount paid to others by limiting the
total amount of money available to be transferred.
, -company instructs bank to transfer the total net pay of all employees for the pay period out the
the company's general bank account and into a special payroll account established for that
purpose.
-the bank then transfers the individual amounts from the payroll account to the employees
checking accounts.
⫸ how banks help businesses control cash. Answer: 1. restricting access- banks provide a
secure place to deposit cash so businesses need to keep only a limited amount of cash on hand
which reduces the risk that it will be stolen or misplaced.
2. documenting procedures- by processing payments made by check or EFT, banks facilitate and
document business transactions.
3. independently verifying- company accountants use a statement of account prepared by the
bank to double-check the accuracy of cash records. compare these two sets of records and
investigate any differences to verify that a company's records are accurate.
⫸ bank reconciliation. Answer: an internal report prepared to verify the accuracy of both the
bank statement and the cash accounts of a business or individual.
-key internal control because it provides independent verification of all cash transactions that
the bank has processed for the company.
-procedure done monthly by a company employee whose duties are segregated from recording
and handling cash.
⫸ bank statement. Answer: for every bank account that a business opens, the bank generates a
statement that it makes available online.
1. overall summary of activity in the account (dates)
2. a list of specific transactions posted to the account (checks cleared, deposits made, other
transactions)
3. running balance in the account (daily balance)
⫸ checks cleared on bank statement. Answer: 1. after the check is written the payee deposits
the check to a financial institution
2. that financial institution contacts the check writers bank, which intern withdraws the amount
of the check from the check writers account and reports it as a deduction on the bank statement
3. the check is then said to have cleared the bank
-checks listed on bank statement in the order they clear
⫸ deposits made on bank statement. Answer: -deposits are listed on the bank statement in the
order in which the bank processes them
