CAP Banking and Cash Management Flashcards
6 cards from real CAP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CAP Banking and Cash Management flashcards as text
Which document authorizes a bank to transfer funds electronically between accounts?
Answer: Wire transfer instruction or ACH authorization
A wire transfer instruction or ACH (Automated Clearing House) authorization directs the bank to move funds electronically.
When establishing a petty cash fund of $150, the correct journal entry is:
Answer: Debit Petty Cash $150; Credit Cash $150
Setting up petty cash transfers money from the main cash account to the petty cash fund: debit Petty Cash, credit Cash.
Which of the following best describes the float in banking?
Answer: The time delay between when a check is written and when funds are actually withdrawn
Float is the period between issuing a check and when it clears the bank, temporarily making funds appear available in both the payer's and payee's accounts.
A positive cash flow from operating activities on the cash flow statement primarily indicates:
Answer: The company's core business operations are generating cash
Positive operating cash flow shows the company's day-to-day business activities are producing more cash than they consume.
Which cash management technique involves delaying outgoing payments as long as possible while still meeting obligations?
Answer: Controlled disbursement
Controlled disbursement maximizes the time a company holds cash before paying obligations, improving liquidity without harming vendor relationships.
Under which circumstance would a company need to establish an allowance for bank errors on its reconciliation?
Answer: When the bank incorrectly records a transaction amount
If the bank records the wrong amount for a transaction, the company records it as a bank error on the reconciliation until the bank corrects it.