Question

6a) A check returned by the bank marked "NSF" means

a. no service fee.

b.   no signature found.

c. not satisfactorily filled-out.

d.   not sufficient funds.

6b) If the month-end bank statement shows a balance of $58,000, outstanding checks are

$15,000, a deposit of $7,000 was in transit at month end, and a check for $600 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is

a.	$49,400.
b.	$50,600.
c.	$65,400.
d.	$66,600.

6c) If a check correctly written and paid by the bank for $724 is incorrectly recorded on the company's books for $742, the appropriate treatment on the bank reconciliation would be to

a. add $18 to the bank's balance.

b.   add $18 to the book's balance.

c. deduct $724 from the bank's balance

. d.   deduct $724 from the book's balance.

6d) A petty cash fund should not be used for

a. postage due.

b.   loans to the petty cash custodian.

c. taxi fares.

d.   customer lunches.

Answer 1

Question 6.a :

Option (D) is correct.

NSF stands for Non sufficient funds, It is the term used by the banking sector to indicate that cheque would not be honoured i.e,cheque will be returned because of insufficient funds in the account.

Question 6.b

Option (b) is correct.

Balance as per bank books

58000

Less : outstanding checks

15000

Add : deposit in transit

7000

Add : Amount charged by bank erroneously

600

Correct Bank balance

50600

Question 6.C

Option (b) is correct.

Add $18 to the books balance.

$742-$724 = $ 18

Question 6.d

Option (b) is correct.

A petty cash should not be used for loans to petty cash custodian.