Chapter 7—Cash [Multiple Choice]

1. A special form on which is recorded pertinent data about a liability and the particulars of
its payment is called a:
a. voucher
b. credit memorandum
c. debit memorandum
d. remittance advice
ANS: A DIF: 1 OBJ: 03

2. EFT:
a. means Efficient Funds Transfer
b. can process certain cash transactions at less cost than by using the mail
c. makes it easier to document purchase and sale transactions
d. means Effective Funds Transfer
ANS: B DIF: 1 OBJ: 03

3. A voucher:
a. is received from customers to explain the purpose of a payment
b. is normally prepared in the Accounting Department
c. system is used to control cash receipts
d. system is an internal control procedure to verify that the assets in the ledger are the ones
the company owns
ANS: B DIF: 2 OBJ: 03

4. A voucher is usually supported by:

a. a supplier's invoice
b. a purchase order
c. a receiving report
d. all of the above
ANS: D DIF: 2 OBJ: 03

5. The person who signs the check is called the:

a. drawee
b. drawer
c. payee
d. bank examiner
ANS: B DIF: 3 OBJ: 04

6. On the bank's accounting records, customers' accounts are normally shown as:
a. debit balances
b. expenses
c. an asset
d. a liability
ANS: D DIF: 2 OBJ: 04

7. Credit memorandums from the bank:

a. decrease a bank customer's account
b. Are used to show a bank service charge
c. show that a company has deposited a customer's NSF check
d. show the bank has collected a note receivable for the customer
ANS: D DIF: 2 OBJ: 04
 8. The party to whose order a check is written is called the:
a. payer
b. drawer
c. drawee
d. payee
ANS: D DIF: 1 OBJ: 04

9. The bank on which a check is drawn is called the:

a. drawer
b. payee
c. drawee
d. creditor
ANS: C DIF: 1 OBJ: 04

10. A debit or credit memorandum describing entries in the depositor's bank account may be
enclosed with the bank statement. An example of a credit memorandum is:
a.deposited checks returned for insufficient funds
b.a promissory note left for collection
c.a service charge
d.notification that a customer's check for $375 was recorded by the depositor as $735 on the
deposit ticket
ANS: B DIF: 5 OBJ: 04