(Multiple Choice)
1. In a bank reconciliation, an EFT cash payment is
a. added to the bank balance.
b. deducted from the book balance.
c. added to the book balance.
d. deducted from the bank balance.

2. If a bookkeeper mistakenly recorded a $72 deposit as $27, the error would be shown on the bank reconciliation as a
a. $45 deduction from the book balance.
b. $27 deduction from the book balance.
c. $27 addition to the book balance.
d. $45 addition to the book balance.

3. If a bank reconciliation included a deposit in transit of $790, the entry to record this reconciling item would include a
a. credit to prepaid insurance for $790.
b. debit to cash for $790.
c. credit to cash for $790.
d. no entry is required.

4. In a bank reconciliation, interest revenue earned on your bank balance is
a. deducted from the book balance.
b. added to the bank balance.
c. added to the book balance.
d. deducted from the bank balance.

5. Before paying an invoice for goods received on account, the controller or treasurer should ensure that
a. the company is paying for the goods it ordered.
b. the company is paying for the goods it actually received.
c. the company has not already paid this invoice.
d. all of the above.

6. Scrumptious Crumpets Bakery is budgeting cash for 2012. The cash balance at December 31, 2011, was $14,000. Scrumptious Crumpets Bakery budgets 2012 cash receipts at $81,000. Estimated cash payments include $44,000 for inventory, $34,000 for operating expenses, and $25,000 to expand the store. Scrumptious Crumpets Bakery needs a minimum cash balance of $13,000 at all times.
Scrumptious Crumpets Bakery expects to earn net income of $76,000 during 2012. What is the final result of the company’s cash budget for 2012?
a. Must arrange new financing for $21,000
b. Pay off $42,000 of debt.
c. $21,000 available for additional investments
d. $42,000 available for additional investments