POA Sec 3 Chap 7 Quiz
This flashcard set defines bank charges, which are fees imposed by a bank for providing services to a business. These may include charges for account maintenance, transactions, or overdraft services.
What is Bank charges
A fee that the bank imposes on a business for serving the business
Key Terms
What is Bank charges
A fee that the bank imposes on a business for serving the business
What is ‘Cheque not yet credited’
A cheque deposited by the business not recorded by the bank yet
What is ‘Cheque not yet presented’
A cheque issued to a creditor who has not cashed in and hence not recorded by the bank
What is “Direct deposit’
Deposits made by debtors directly into the bank
What is ‘Direct payment’
Money paid directly by the bank to a creditor
What is ‘interest income’
Money paid by the bank to the business for keeping deposits with the bank
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| Term | Definition |
|---|---|
What is Bank charges | A fee that the bank imposes on a business for serving the business |
What is ‘Cheque not yet credited’ | A cheque deposited by the business not recorded by the bank yet |
What is ‘Cheque not yet presented’ | A cheque issued to a creditor who has not cashed in and hence not recorded by the bank |
What is “Direct deposit’ | Deposits made by debtors directly into the bank |
What is ‘Direct payment’ | Money paid directly by the bank to a creditor |
What is ‘interest income’ | Money paid by the bank to the business for keeping deposits with the bank |
When cash is deposited, the bank statement will show a ______ entry and conversely when cash is withdraw, it will show a _________ entry | credit; debit |
A bank interest expense will cause the bank account balance to be higher or lower than the bank statement balance | higher |
A bank interest income will cause the bank account balance to be higher or lower than the bank statement balance | lower |
A cheque not yet credited will cause the bank account balance to be higher or lower than the bank statement balance | higher |
A cheque not yet presented will cause the bank account balance to be higher or lower than the bank statement balance | lower |
A Direct deposit will cause the bank account balance to be higher or lower than the bank statement balance | lower |
A Direct payemnt will cause the bank account balance to be higher or lower than the bank statement balance | higher |
A Dishonoured cheque will cause the bank account balance to be higher or lower than the bank statement balance | higher |
Which of the following will be recorded in the bank reconcilliation statement? Cheques not yet credited Direct payments Credit transfers Dishonoured cheques | Cheques not yet credited |
Explain how a bank statement serves as a source document | To verify against its own recording of transactions involving its cash at bank account |
Explain why a debit balance in the cash at bank account is presented as a credit balance in the bank statement | The business refers to money kept with the bank as an asset; the bank refers to the money that the business keeps with the bank as a liability |
Explain the purposes of preparing bank reconciliations | To reconcile the discrepancies between balances and transactions recorded in the cash at bank account and bank account To identify any errors in the cash at bank account of the bank statement |