Chapter 8 Bank Reconciliation Flashcards Preview

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Flashcards in Chapter 8 Bank Reconciliation Deck (16)
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1
Q

T/F: A demand deposit is interest bearing.

A

False. It’s noninterest bearing

2
Q

T/F: A saving deposit is interest bearing.

A

True.

3
Q

T/F: A time deposit is interest bearing.

A

True.

4
Q

A time deposite is similar to a saving deposit but it’s evidenced by a ____ embodied in an instrument called a ____

A

formal agreement, certificate of deposit

5
Q

T/F: a time deposit may be only be preterminated, not withdrawn on demand.

A

False. A time deposit may be preterminated or withdrawn on demand or after a certain period of time agreed upon.

6
Q

A bank reconciliation is necessary only for a ____ or ____

A

demand deposit, checking account

7
Q

The bank statement is a monthly report of the bank to the depositor showing:

A
  1. Beginning cash balance per bank; 2. Deposits made by the depositor and acknowledged by the bank; 3. The checks drawn by the depositor and paid by the bank; The daily cash balance per bank during the month
8
Q

Book reconciling items:

A

Credit and Debit Memos, Errors

9
Q

Bank reconciling items:

A

Deposits in Transit, Outstanding Checks, Errors

10
Q

Examples of Credit Memos:

A

N/R collected by bank in favor of the depositor and credited to the account of the depositor, Proceeds of bank loan credited to the account of the depositor, Matured time deposits transferred by the bank to the current account of the depositor

11
Q

Examples of Debit Memos:

A

NSF or DAIF Checks, Technically defective checks (no signature or countersignature, uncountersigned erasures, mutilated checks, conflict between amount in words and figures), Bank service charges (charges for interest, collection, checkbook, and penalty), Reduction of loan (amount deducted from the current account of the depositor in payment for loan which the depositor owes to the bank and which has already matured)

12
Q

Deposit in transit

A

Collections already recorded by the depositor as cash receipts but not yet reflected on the bank statement.

13
Q

Deposits in transit include:

A

(1) Collections already forwarded to the bank for deposit but too late to appear in the bank statement (2) Undeposited collections or those still in the hands of the depositor (cash on hand)

14
Q

Outstanding Checks

A

Checks already recorded by the depositor as cash disbursements but not yet reflected on the bank statement

15
Q

Outstanding Checks include:

A

(1) Checks drawn and already given to payees but not yet presented for payment (2) Certified checks should be deducted from the total outstanding checks if included therein because they are no longer outstanding for bank reconciliation purposes

16
Q

T/F: There is no preference between the Adjusted balance method, Book to bank method, and Bank to book method.

A

False. The Adjusted balance method is preferred.