Question 1

What is a deposit in transit? How are deposits in transit reflected on the bank reconciliation?

Accepted Answer

Companies frequently leave deposits in the bank's night depository or make them on the day following the receipt of cash. Such deposits are called deposits in transit. Because these deposits have been recorded on the books of the company, but not yet added to the depositor's account by the bank, they must be added to the unadjusted bank balance.

Question 2

Indicate how each event affects the elements of financial statements. Use the following letters to record your answer in the box shown below each element. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA. You do not need to enter amounts. Enter only one letter for each element.Increase = I Decrease = D Not Affected = NADuring the process of preparing the bank reconciliation, an employee for Heath Company discovered that the bank deducted a check from the Hearst Company (a different company).

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Question 2

Correct Answer:

Verified

The bank error will be added back to the bank balance, and Heath Company will make sure that the bank corrects the error. Adjustments to the bank balance have no effect on the company's financial statements.

Accepted Answer

The bank error will be added back to the bank balance, and Heath Company will make sure that the bank corrects the error. Adjustments to the bank balance have no effect on the company's financial statements.

Question 3

Indicate how each event affects the elements of financial statements. Use the following letters to record your answer in the box shown below each element. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA. You do not need to enter amounts. Enter only one letter for each element.Increase = I Decrease = D Not Affected = NADuring the process of preparing the bank reconciliation, an employee for Heath Company discovered that the bank deducted a check from the Hearst Company (a different company).

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Question 2

Correct Answer:

Verified

The bank error will be added back to the bank balance, and Heath Company will make sure that the bank corrects the error. Adjustments to the bank balance have no effect on the company's financial statements.

Accepted Answer

When the company records receipt of the collection on a note receivable, it will increase one asset (cash) and decrease another asset (notes receivable). It is an asset exchange transaction that results in no overall effect on total assets. It does not affect the income statement. It is reported as a cash inflow from investing activities on the statement of cash flows.

Question 4

For internal control purposes, what is meant by "separation of duties?"

Accepted Answer

When duties are separated, the work of o

Question 5

What are the three types of audit opinion, and what is the meaning of each? Which type of opinion is considered the best? Which is considered the worst?

Accepted Answer

The first type is an unqualified opinion

Question 6

The following information pertains to the bank reconciliation of January 31 for the Greis Company:
 $\begin{array}{llr}
  \text { Unadjusted bank balance } &\$18,900\
 \text {  Bank collection of a note receivable (no interest)} &2,000\
 \text { Bank service charge } &60\
 \text { Deposit in transit } &4,000\
 \text {NSF check returned by the bank  } &1,800\
 \text {Outstanding checks  } &6,000\
\end{array}$
 
In addition, the reconciliation revealed one error: Check number 2146 for $152, written to pay utilities expense, was incorrectly recorded in the books for $125.Required:Using the above information, compute the unadjusted book balance for cash.

Accepted Answer

$16,787 unadjusted book balanceFirst, co

Question 7

Michelle Edwards operates a small dress shop that sells various items of apparel and accessories. She employs two clerks who make sales to customers, accept returns when a customer is dissatisfied with merchandise, and put new merchandise on display. One of the clerks, Kristen Scott, was hired recently. Michelle had always done all the accounting for the store and had made bank deposits. However, Kristen has offered to do the accounting for the store during slow periods when there are no customers in the store; she also has begun making bank deposits as she leaves for the day. Having Kristen take these responsibilities allows Michelle more time for acquiring merchandise for the store and for personal errands. What potential risks for the success of Michelle's business are present in this situation?

Accepted Answer

This situation is risky because it viola

Question 8

List five internal control procedures that should be followed to safeguard cash and reduce the likelihood of theft.

Accepted Answer

Any five of the following:Separation of

Question 9

What is meant by the term "materiality?"

Accepted Answer

Materiality is the point at which knowle

Question 10

Indicate how each event affects the elements of financial statements. Use the following letters to record your answer in the box shown below each element. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA. You do not need to enter amounts. Enter only one letter for each element.Increase = I Decrease = D Not Affected = NADuring the process of preparing the bank reconciliation, an employee for Heath Company discovered that the bank deducted a check from the Hearst Company (a different company).

Free

(Essay)

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Question 2

Correct Answer:

Verified

The bank error will be added back to the bank balance, and Heath Company will make sure that the bank corrects the error. Adjustments to the bank balance have no effect on the company's financial statements.

Accepted Answer

@#IMG-DLM& 
Recording the NSF check increases one

Question 11

The bank statement for Raymond Company included a debit memo for a bank service charge of $50.Required:Show the effects of recognizing the bank service charge on the financial statements by recording appropriate amounts in the financial statements model provided. Include dollar amounts of increases and decreases; for cash flow, indicate whether it is an operating activity, investing activity, or financing activity.

Accepted Answer

@#IMG-DLM& 
The bank service charge is a

Question 12

What is a disclaimer of audit opinion?

Accepted Answer

A disclaimer of audit opinion is made wh

Question 13

When a debit memo is included in a bank statement, what effect does that have on the cash balance?

Accepted Answer

Banks deduct such fees and pen

Question 14

One of your friends is preparing to open a store that will sell outdoor gear. When you heard that the business would have three or four employees, you told your friend that she would need to pay careful attention to separation of duties. She has asked you to explain what duties should be separated and why separation of duties is important in a business. Write a note to your friend explaining these issues.

Accepted Answer

Separation of duties is intended to redu

Question 15

What asset is generally most susceptible to theft?

Accepted Answer

CashCash has universal value, and a smal

Question 16

The unadjusted cash account balance for Carson Company at December 31 is $12,615. The bank statement showed an ending balance of $18,250 at December 31. The following information is available from an examination of the bank statement and the company's accounting records:
 $\begin{array}{llr}
  \text { Bank service charge } &\$20\
 \text {Outstanding checks  } &7,500\
 \text { NSF check from a customer } &425\
 \text { Deposits in transit } &1,222\
\end{array}$
 Check number 433 for the purchase of inventory was written correctly and paid by the bank correctly for $432, but was recorded on the books at $234. Carson uses the perpetual inventory system.Required:Prepare a bank reconciliation as of December 31.Indicate how each of the required adjusting entries impact the financial statements.

Accepted Answer

1.
 \[\begin{array} { l r } 
\text { Bal

Question 17

Merrifield Lawn Care's bank statement at August 31 showed an ending balance of $23,716.87. The unadjusted cash account balance for Merrifield is $20,237.98. The following data were gathered by Merrifield's accountant:Check number 2143 was correctly written for $427. It was recorded in the company's books as $472 for utilities.Outstanding checks as of August 31: $7,128.71NSF check from customer: $71.82Debit memo related to the returned deposit: $8.00Credit memo related to interest earned: $10.00Deposits in transit: $3,625.00
Required:Prepare a bank reconciliation for Merrifield Lawn Care at August 31.Indicate how each of the required adjusting entries impact the financial statements.

Accepted Answer

1.
 \[\begin{array} { l r } 
\text { Bal

Question 18

Indicate how each event affects the elements of financial statements. Use the following letters to record your answer in the box shown below each element. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA. You do not need to enter amounts. Enter only one letter for each element.Increase = I Decrease = D Not Affected = NADuring the process of preparing the bank reconciliation, an employee for Heath Company discovered that the bank deducted a check from the Hearst Company (a different company).

Free

(Essay)

4.8/5

(37)

Question 2

Correct Answer:

Verified

The bank error will be added back to the bank balance, and Heath Company will make sure that the bank corrects the error. Adjustments to the bank balance have no effect on the company's financial statements.

Accepted Answer

@#IMG-DLM&
 Outstanding checks are deduc

Question 19

Are outstanding checks an adjustment to the book balance, the bank balance, or not used in a bank reconciliation?

Accepted Answer

Outstanding checks are an adjustment to

Question 20

Indicate how each event affects the elements of financial statements. Use the following letters to record your answer in the box shown below each element. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA. You do not need to enter amounts. Enter only one letter for each element.Increase = I Decrease = D Not Affected = NADuring the process of preparing the bank reconciliation, an employee for Heath Company discovered that the bank deducted a check from the Hearst Company (a different company).

Free

(Essay)

4.8/5

(37)

Question 2

Correct Answer:

Verified

The bank error will be added back to the bank balance, and Heath Company will make sure that the bank corrects the error. Adjustments to the bank balance have no effect on the company's financial statements.

Accepted Answer

@#IMG-DLM& 
Deposits in transit are adde

What is a deposit in transit? How are deposits in transit reflected on the bank reconciliation?

For internal control purposes, what is meant by "separation of duties?"

What are the three types of audit opinion, and what is the meaning of each? Which type of opinion is considered the best? Which is considered the worst?

List five internal control procedures that should be followed to safeguard cash and reduce the likelihood of theft.

What is meant by the term "materiality?"

What is a disclaimer of audit opinion?

When a debit memo is included in a bank statement, what effect does that have on the cash balance?

What asset is generally most susceptible to theft?

Are outstanding checks an adjustment to the book balance, the bank balance, or not used in a bank reconciliation?

An Introduction to Accounting

Accounting for Accruals and Deferrals

Accounting for Merchandising Businesses

Accounting for Receivables and Inventory Cost Flow

Accounting for Long-Term Operational Assets

Accounting for Liabilities

Proprietorships, Partnerships, and Corporations

Financial Statement Analysis

An Introduction to Management Accounting

Cost Behavior, Operating Leverage, and Profitability Analysis

Cost Accumulation, Tracing, and Allocation

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Planning for Capital Investments

Filters

Exam 4: Internal Controls, Accounting for Cash, and Ethics

What is a deposit in transit? How are deposits in transit reflected on the bank reconciliation?

For internal control purposes, what is meant by "separation of duties?"

What are the three types of audit opinion, and what is the meaning of each? Which type of opinion is considered the best? Which is considered the worst?

List five internal control procedures that should be followed to safeguard cash and reduce the likelihood of theft.

What is meant by the term "materiality?"

What is a disclaimer of audit opinion?

When a debit memo is included in a bank statement, what effect does that have on the cash balance?

What asset is generally most susceptible to theft?

Are outstanding checks an adjustment to the book balance, the bank balance, or not used in a bank reconciliation?

An Introduction to Accounting

Accounting for Accruals and Deferrals

Accounting for Merchandising Businesses

Accounting for Receivables and Inventory Cost Flow

Accounting for Long-Term Operational Assets

Accounting for Liabilities

Proprietorships, Partnerships, and Corporations

Financial Statement Analysis

An Introduction to Management Accounting

Cost Behavior, Operating Leverage, and Profitability Analysis

Cost Accumulation, Tracing, and Allocation

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Planning for Capital Investments

Filters