Chapter 6 AA015

A Bank Statement..

• allows a company/depositor to know the financial position of the bank as of a certain date.

• is a credit reference letter written by the company's/depositor's bank.

• is a bill from the bank for services rendered.

• shows the activity which increased or decreased the company's/depositor's account balance.

A check returned by the bank marked as "NSF" means

• not satisfactorily filled-out.

• not sufficient funds.

• no signature found.

• no service fee.

On a bank reconciliation, outstanding cheques are

• added to the bank balance.

• deducted from the bank balance.

• added to the book balance.

• deducted from the book balance.

A bank reconciliation should be prepared

• whenever the bank refuses to lend the company money.

• when an employee is suspected of fraud.

• To explain any difference between the company's/depositor's balance per books and the balance per bank.

• by the person who is authorized to sign checks.

In the Bank Statement, cash deposited by the company/depositor is recorded as...

• Credit

• Debit

• Liability

• Expense

Bank Reconciliation statement compares a Bank Statement with _________

• Cash Payment Journal only

• Cash Receipt Journal only

• Cashbook (Cash Column)

• Cashbook (Bank Column)

What do we do to “Deposit in transit” in bank reconciliation?

• Added to Bank Balance

• Subtracted from Bank Balance

• Subtracted from the Cash Book Balance

• Added to Cash Book Balance

Outstanding cheques also referred to as..

• Bounced cheques

• Unpresented cheques

• Uncredited cheques

• Uncollected cheques

What type of cheques is that which is issued by a firm but not deposited to the bank

• Uncredited cheques

• Outstanding cheques

• Uncollected cheques

• Bounced cheques

What do we do to "Bank service charges" in Bank Reconciliation Statement?

• Add to Book Balance

• Deduct from Book Balance

• Add to Bank Balance

• Deduct from Bank Balance