MASTERING CORRECTION OF ACCOUNTING ERRORS
TESTBANK
Section 1WHERE ERRORS OCCUR AND HOW THEY ARE FOUND
1. How frequently should the bank reconciliation be performed?
a. Monthly
b. Weekly
c. Each time wages are paid to employees
d. As frequently as is necessary to find errors
2. At year-en...
MASTERING CORRECTION OF ACCOUNTING ERRORS
TESTBANK
Section 1WHERE ERRORS OCCUR AND HOW THEY ARE FOUND
1. How frequently should the bank reconciliation be performed?
a. Monthly
b. Weekly
c. Each time wages are paid to employees
d. As frequently as is necessary to find errors
2. At year-end 20X2, you see that no insurance expense was recorded for 20X1. On July 1, 20X1, your company
had prepaid a 2-year policy for $4,800, debiting Prepaid Insurance and crediting Cash. Correcting this error
requires:
a. a prior period adjustment
b. a current period adjustment
c. both a and b
d. neither a nor b
3. Company accounting departments perform periodic reviews to ensure the reliability of company accounting
procedures during:
a. preparation of the trial balance
b. a review of adjusting journal entries
c. an external audit
d. an internal audit
4. Bad debt expense of $500 recorded as $5,000 is an example of:
a. a transposition error
b. incorrect use of an estimate
c. a classification error
d. a slide error
5. GrayCo estimates debt using 2% of net sales, but you discover that this year someone used 4% of net sales.
This is:
a. a transposition error
b. an incorrect estimate
c. incorrect use of an accounting principle
d. a slide error
1. You are performing a bank reconciliation for August 20X1. The balance per bank is $21,863; the ledger Cash
balance, $17,250. Outstanding checks are as follows:
Check Number Amount
2003 $ 560
2004 910
2008 1,700
2009 2,110
You have also identified the following:
A $13 bank service charge for August
Ansource
study
This NSF wascheck forby$720
downloaded 100000820529148 from CourseHero.com on 07-14-2022 15:23:08 GMT -05:00
Check #1996, made out to Local Gas & Electric for $798, was booked as $870
https://www.coursehero.com/file/136948401/Mastering-Correction-of-Accounting-Errors-Testbankdoc/
, Mastering Correction of Accounting Errors
A $6 charge for your bank’s Web Banking, which the company does not use
To reconcile the balance per book to the balance per bank will require adjusting the book balance by:
a. $661
b. $727
c. $733
d. $648
2. In a bank reconciliation, to adjust for a customer’s NSF check requires:
a. increasing the bank balance by the amount
b. reducing the bank balance by the amount
c. increasing the book balance by the amount
d. reducing the book balance by the amount
3. In a bank reconciliation, to adjust for a bank charge for another company's check requires:
a. increasing the bank balance by the amount of the check
b. reducing the bank balance by the amount of the check
c. increasing the book balance by the amount of the check
d. reducing the book balance by the amount of the check
4. In a bank reconciliation, to adjust for in incorrect deposit of $1,000 from another company in your account
requires:
a. increasing the bank balance by the amount of the deposit
b. reducing the bank balance by the amount of the deposit
c. increasing the book balance by the amount of the deposit
d. reducing the book balance by the amount of the deposit
5. In a bank reconciliation, to adjust for the bank’s deducting $980 for a company check that you wrote and
booked for $890 requires:
a. increasing the book balance by $90
b. reducing the book balance by $90
c. increasing the bank balance by $90
d. reducing the bank balance by $90
6. Your company writes a check for $123, but records it as $132. To adjust for this in a bank reconciliation, you
would:
a. increase the bank balance by $9
b. increase the book balance by $9
c. reduce the bank balance by $9
d. reduce the book balance by $9
7. During the bank reconciliation, you notice that the bank deducted $1,321 for check 3201, which was made out
for $3,123. What adjustment do you make?
a. Increase the bank balance by $1,802
b. Reduce the bank balance by $1,802
c. Increase the book balance by $1,802
d. Reduce the book balance by $1,802
8. During the bank reconciliation, you see that the following checks have not cleared:
Check Number Amount
2003 $2,300
2004 2,400
2005 2,500
2006 3,300
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