1. Which of the following would NOT need to be accounted for in a bank reconciliation?

A. NSF checks recorded by the bank but not by the company.

B. Checks written by the company and recorded by the bank.

C. Interest earned recorded by the bank but not the company.

D. Deposits outstanding recorded by the company but not the bank.

2. Which of the following is not an example of preventive controls?

A. Separation of duties.

B. Reconciliations.

C. Proper authorization.

D. Physical controls.

3. The direct write-off method is used when:

A. A company has greater cash outflows than cash inflows.

B. A company expects excessive sales returns.

C. A company elects to use this method as one of several alternatives.

D. Uncollectible accounts are not anticipated or are immaterial.