1) Which of the following statements is not correct?

Multiple Choice: 

In accounting, the term "cash" includes checks, money orders, and funds on deposit in a bank as well as currency and coins; 

In a well managed business, most bills are paid by cash; 

The cash register proof is used to enter the cash sales and sales tax in the journal; 

The petty cash account balance is usually listed separately from the Cash account on the Balance Sheet.

2) Most businesses use the petty cash fund to pay for

Multiple Choice: 

internal expenses; 

accounts payable; 

small expenditures; 

merchandise purchases.

3) ABC Office Suppliers keeps a $200 change fund in its cash register. The cash sales per the cash register tape on May 30 were $700. The cash count was $908. Identify the correct journal entry below to record the sales and cash overage (or shortage) for May 30.

		DEBIT	CREDIT
(A)	Cash	700
	Cash Short or Over	8
	Sales		708
(B)	Cash	700
	Sales		700
(C)	Cash	708
	Cash Short or Over		8
	Sales		700
(D)	Cash	908
	Sales		900
	Cash Short or Over		8

Multiple Choice: 

Option A; 

Option B; 

Option C; 

Option D

4) A check issued for $890 to pay a vendor on account was recorded in the firm's records as $980; the canceled check was properly listed on the bank statement at $890. To arrive at an accurate balance on a bank reconciliation statement, the error should be

Multiple Choice: 

added to the bank statement balance; 

deducted from the bank statement balance; 

added to the book balance; 

deducted from the book balance.

5) A check issued for $1,980 to pay a vendor on account was recorded in the firm's records as $1,890; the canceled check was properly listed on the bank statement at $1,980. To arrive at an accurate balance on a bank reconciliation statement, the error should be

Multiple Choice: 

added to the bank statement balance; 

deducted from the book balance; 

deducted from the bank statement balance; 

added to the book balance.

6) The entry to replenish a petty cash fund typically includes

Multiple Choice: 

a debit to Cash and a credit to Petty Cash; 

debits to various asset and expense accounts and a credit to Cash ;

debits to various expense accounts and a credit to Petty Cash Fund; 

a debit to Petty Cash Fund and a credit to Cash.

7) Which of the following statements is correct?

Multiple Choice: 

An endorsement is a written authorization that transfers ownership of a check; 

If a check is negotiable, it means that ownership cannot be transferred; 

A check is a written order signed by an authorized person, the drawee; 

Most businesses make one monthly deposit of cash receipts in order to maintain better control over their cash.