Bank Reconciliation

question 64

Multiple Choice

Bank reconciliation

• A)Fundamental guidelines applicable to all companies established to minimize the risk of fraud and theft and to increase the reliability and accuracy of the accounting records.
• B)Short-term, highly liquid investment assets that are readily convertible to cash and close enough to their due date so that their market value will not greatly change.
• C)An internal document used to collect information to control cash payments and to ensure that a transaction is properly recorded.
• D)An income statement account used to record the income effects of cash overages and cash shortages arising from missing petty cash receipts or errors in making change.
• E)A measure of how quickly a company can convert its accounts receivable into cash.
• F)Principle that says the costs of internal controls must not exceed their benefits
• G)A set of procedures and approvals designed to control cash payments and the acceptance of liabilities.
• H)Used by the bank to verify signatures of persons authorized to write checks.
• I)A report explaining any differences between the checking account balance according to the depositor's records and the balance reported on the bank statement.
• J)The ability of a company to pay for its near-term obligations.

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Definitions:

Return on Equity

A measure of a corporation's profitability that reveals how much profit a company generates with the money shareholders have invested.

Average Collection Period

The average number of days it takes for a company to receive payments owed by its customers.

Current Ratio

A financial metric assessing a firm's capacity to settle debts due within a year by comparing its current assets to its current liabilities.

Vertical Analysis

The presentation of a company’s financial statements in common-size form.