Exam

Name___________________________________

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) The person who draws a check on his or her account is the
A) Payer.
B) Drawer.
C) Drawee.
2) A cashier's check is also called a
A) A cancelled check.
C) Treasurer's check.

D) Payee.

B) An outstanding check.
D) A personal check.

1)

2)

3) A bank money order

A) Is similar to a postal money order.
B) May be used in place of personal check for transactions.
C) May be obtained from a bank.
D) All of the above.

3)

4) ________ is an electronic delivery system for financial transactions.

A) Computer assisted drawing
B) Federal depository banking system
C) Electronic funds transfer
D) None of the above

4)

5) ________ provides easy management of banking transactions online wherever you have access to
the Internet.
A) Telephone transfers
B) Automatic debits
C) Web banking
D) Debit cards

5)

6) Check endorsements include the following kind(s) of endorsement:

A) Blank endorsement.
B) Full endorsement.
C) restrictive endorsement.
D) All of the above.

6)

7) A comparison of the final bank balance on the bank statement with the company checkbook
balance is called a
A) Petty cash fund balance.
B) Balance sheet.
C) Income statement.
D) Bank reconciliation

7)

8) To calculate gross earnings on a payroll register when there is overtime

A) Total regular earnings and overtime earnings.
B) Multiply regular pay time 6.2%.
C) Multiply regular time times hourly rate.
D) Multiply regular pay times overtime hours times time-and-one-half.

8)

9) Another name for an income statement is a/an

A) Profit and loss statement.
C) Balance sheet.

9)

B) Accounts receivable schedule.

D) Statement of owner's equity.

10) You can research current currency exchange rates

A) By searching the Internet.
C) By calling your local bank.

B) By checking the newspaper.

D) All of the above.

10)

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
11) The instrument used most often for transferring funds is the debit card.

11)

12) A bank draft is a check drawn by a bank on its own funds in another bank located either in the
same city or another city.

12)

13) When traveler's checks are lost or stolen, the owner usually can obtain a refund immediately by
contacting a representative office of the company whose checks were purchased.

13)

14) When a customer activates an automated teller machine with an EFT card and enters a PIN or
secret password, the computer is ready to answer an inquiry about the customer's account, supply
balance data, or dispense cash.

14)

15) The company making an automatic deposit must be given the account's American Banking
Association electronic pin number and the bank account number in which the money is to be
deposit.

15)

16) The drawee can request a stop-payment notification on a check for a fee only at certain days during
the month.

16)

17) Cancelled checks are those checks that have not cleared the bank and are not listed on the monthly
bank statement.

17)

18) Two FICA taxes are required for all employees each payroll period--social security and Medicare.

18)

19) A master budget consists of various budgets that collectively express the company's future
activities.

19)

20) Using a perpetual inventory card is helpful to keep track of the inventory of supplies.

20)

ESSAY. Write your answer in the space provided or on a separate sheet of paper.
21) Explain when a cashiers check would be most often used.
22) Explain how a debit card is obtained.
23) What is web banking and what functions does it provide to the bank customer?
24) What is a stop-payment notification?
25) What is a petty cash fund used for?

Answer Key
Testname: UNTITLED9
1) B
2) C
3) D
4) C
5) C
6) D
7) D
8) A
9) A
10) D
11) FALSE
12) TRUE
13) TRUE
14) TRUE
15) FALSE
16) FALSE
17) FALSE
18) TRUE
19) TRUE
20) TRUE
21) Cashiers checks are suitable for times when a check is not acceptable, such as when it is necessary to guarantee that a
certain amount of funds for payment are available. The check may be made payable to whomever you designate and
can be for any amount.
22) Debit cards are obtained through the bank by completing a credit card application through companies such as VISA or
MasterCard. Once the application is approved, the bank issues the debit card, which can be used either as a debit card
or a credit card.
23) Web banking is an Internet service that provides easy management of bank transactions online wherever you have
access to the Internet. Primary functions of such services enable business customers to make electronic transfers
between accounts and get real-time information on balances and transactions. Accounts may be viewed and
manipulated on screen just as you might with more traditional methods of banking. Many banks also offer electronic
bill payment services.
24) At the request of the drawer, a bank will place stop-payment notification on a check for a fee at any time. Stopping
payment is a safety measure that should be taken when a check has been lost or stolen. This step may also be taken
when a check is written for an incorrect amount, when certain conditions of agreement have not been met, or for other
reasons.
25) When the amount of office expenditure is small and payment should be made immediately, it may be more convenient
to pay cash rather than write a check. To provide cash to pay for incidental items, such as messenger service, postage
due on a package, or emergency purchases of office supplies, organizations establish a petty cash fund. The fund can
range from $10 to $100 or more, depending on the cash needs for a certain period, usually a month. Even though the
fund is used to make miscellaneous payments, the petty cash fund must be accounted for.