SUA PART #3 EXAM QUESTIONS WITH
COMPLETE ANSWERS
Account for all other items - ANSWER-1) bank service charges
2) NSF checks
--Record adjustments for these items in the General Journal and post these items to
the general ledger
If balances don't match: - ANSWER-Error in bank reconciliation error, math error,
bank error, or possibly theft of cash
Recording Error - ANSWER-Cash and AP depending on if it's over written or under
written
Bank Service Charges - ANSWER-Miscellaneous expense and cash
The Accounting Process - ANSWER-1) Transactions Occur
2) Prepare Documents
3) Record in Journals
4) Post to Ledgers
5) Prepare Unadjusted General Ledger Trial Balance
6) Prepare and Post adjusting entries
7) Prepare adjusted trial balance
8) Prepare Financial Statements
9) Prepare closing entries
Prepare Unadjusted General Ledger Trial Balance - ANSWER-1) A listing of G/L
account balances at a specific point in time with debits in one column and credits in
another column
2) Generated help with preparing adjusting entries and financial statements
3) Typically generated at month-ends, quarter-ends, or year-ends. All transactions
(except adjusting entries) must be recorded before generating trial balance.
4) Total debits MUST equal total credits
5) "Unadjusted" means adjusting entries haven't been made yet
Prepare & Post Adjusting Entries - ANSWER-1) To accrue revenue, expense, or
asset purchase for a completed transactions for which events or document which
"trigger" recording have not yet occurred, been ore oared or been received
2) To adjust liability or asset accounting holding deferred (unearned) revenue or
deferred expense to reflect culmination of earnings process (revenue) or "using up"
of asset (expense)
3) To record estimated expenses
To Prepare a Bank Reconciliation - ANSWER-1) A bank statement including all
cancelled checks and deposit slips for the period (or a list of cancelled checks and
deposits that have been reviewed)
2) The cash receipts journal
3) The cash disbursements journal
, 4) The payroll journal
5) The cash general ledger account
6) The prior month's bank reconciliation
Setting up Bank Reconciliation - ANSWER-1) Setup the two column reconciliation by
entering the ending balance from the bank statement and cash general ledger
account
2) Trace all cash receipts transactions
3) Trace all cash disbursement transactions
4) Account for all other accounts
5) Foot the bank reconciliation and compare the adjusted bank balance to the
general ledger after the adjustments have been made
Trace Cash Receipts - ANSWER-1) Verify that all outstanding deposits (i.e. deposits
in transit) on the prior month's bank reconciliation appear on the current period bank
statement
2) Trace all the receipts from the current month's cash receipts journal to the current
period bank statement
3) Investigate any deposits appearing on the bank statement but not recorded in the
Cash Receipts Journal
Trace Cash Disbursements - ANSWER-1) Verify that all outstanding checks on the
prior month's bank reconciliation appear on the current period bank statement
2) Trace all the disbursements (i.e. checks) from the current month's cash
disbursement journal to the current period bank statement and compare payee to the
copy of the cancelled check
3) Investigate any checks or disbursements on the bank statement but not recorded
in cash disbursements journal
Adjusting Journal Entries - ANSWER-1) Each adjusting entry is prepared separately
and recorded in the general journal
a) Posted individually to the appropriate sub-ledger, if applicable
b) Posted to the general ledger accounts affected
c) Reflected in the trial balance worksheet "adjustments" column
Determine Adjustment for Depreciation - ANSWER-1) The amount of depreciation is
typically calculated when financial statements are prepared (i.e., monthly, quarterly,
or annually)
2) For simplicity, many companies use the half-year convention to determine
depreciation for the first year
Half-Year Convention - ANSWER-A company records a half of a year's depreciation
for the first year, regardless of when the property was actually put into service
Recording Depreciation - ANSWER-1) General journal to record and adjust
accumulate depreciation
2) Also updates the depreciation and net book value of the asset in the fixed asset
subsidiary ledger
3) The general journal entry is the posted individually to the general ledger
COMPLETE ANSWERS
Account for all other items - ANSWER-1) bank service charges
2) NSF checks
--Record adjustments for these items in the General Journal and post these items to
the general ledger
If balances don't match: - ANSWER-Error in bank reconciliation error, math error,
bank error, or possibly theft of cash
Recording Error - ANSWER-Cash and AP depending on if it's over written or under
written
Bank Service Charges - ANSWER-Miscellaneous expense and cash
The Accounting Process - ANSWER-1) Transactions Occur
2) Prepare Documents
3) Record in Journals
4) Post to Ledgers
5) Prepare Unadjusted General Ledger Trial Balance
6) Prepare and Post adjusting entries
7) Prepare adjusted trial balance
8) Prepare Financial Statements
9) Prepare closing entries
Prepare Unadjusted General Ledger Trial Balance - ANSWER-1) A listing of G/L
account balances at a specific point in time with debits in one column and credits in
another column
2) Generated help with preparing adjusting entries and financial statements
3) Typically generated at month-ends, quarter-ends, or year-ends. All transactions
(except adjusting entries) must be recorded before generating trial balance.
4) Total debits MUST equal total credits
5) "Unadjusted" means adjusting entries haven't been made yet
Prepare & Post Adjusting Entries - ANSWER-1) To accrue revenue, expense, or
asset purchase for a completed transactions for which events or document which
"trigger" recording have not yet occurred, been ore oared or been received
2) To adjust liability or asset accounting holding deferred (unearned) revenue or
deferred expense to reflect culmination of earnings process (revenue) or "using up"
of asset (expense)
3) To record estimated expenses
To Prepare a Bank Reconciliation - ANSWER-1) A bank statement including all
cancelled checks and deposit slips for the period (or a list of cancelled checks and
deposits that have been reviewed)
2) The cash receipts journal
3) The cash disbursements journal
, 4) The payroll journal
5) The cash general ledger account
6) The prior month's bank reconciliation
Setting up Bank Reconciliation - ANSWER-1) Setup the two column reconciliation by
entering the ending balance from the bank statement and cash general ledger
account
2) Trace all cash receipts transactions
3) Trace all cash disbursement transactions
4) Account for all other accounts
5) Foot the bank reconciliation and compare the adjusted bank balance to the
general ledger after the adjustments have been made
Trace Cash Receipts - ANSWER-1) Verify that all outstanding deposits (i.e. deposits
in transit) on the prior month's bank reconciliation appear on the current period bank
statement
2) Trace all the receipts from the current month's cash receipts journal to the current
period bank statement
3) Investigate any deposits appearing on the bank statement but not recorded in the
Cash Receipts Journal
Trace Cash Disbursements - ANSWER-1) Verify that all outstanding checks on the
prior month's bank reconciliation appear on the current period bank statement
2) Trace all the disbursements (i.e. checks) from the current month's cash
disbursement journal to the current period bank statement and compare payee to the
copy of the cancelled check
3) Investigate any checks or disbursements on the bank statement but not recorded
in cash disbursements journal
Adjusting Journal Entries - ANSWER-1) Each adjusting entry is prepared separately
and recorded in the general journal
a) Posted individually to the appropriate sub-ledger, if applicable
b) Posted to the general ledger accounts affected
c) Reflected in the trial balance worksheet "adjustments" column
Determine Adjustment for Depreciation - ANSWER-1) The amount of depreciation is
typically calculated when financial statements are prepared (i.e., monthly, quarterly,
or annually)
2) For simplicity, many companies use the half-year convention to determine
depreciation for the first year
Half-Year Convention - ANSWER-A company records a half of a year's depreciation
for the first year, regardless of when the property was actually put into service
Recording Depreciation - ANSWER-1) General journal to record and adjust
accumulate depreciation
2) Also updates the depreciation and net book value of the asset in the fixed asset
subsidiary ledger
3) The general journal entry is the posted individually to the general ledger
