Cash-Payments Journal

### What is the primary function of a cash-payments journal? - [x] To record all cash payments from an organization's bank account. - [ ] To manage investment portfolios. - [ ] To record only large financial transactions. - [ ] To detail company profits exclusively. > **Explanation:** The primary function of a cash-payments journal is to record all cash payments made from an organization's bank account, helping in tracking cash outflows precisely. ### Which type of transactions would typically be recorded in a cash-payments journal? - [ ] Cash sales - [ ] Inventory purchases on account - [x] Monthly rent payments - [ ] Equity investments > **Explanation:** Monthly rent payments and other expenses made with cash are recorded in a cash-payments journal. ### What combined records does a cash book usually contain? - [ ] Only cash receipts - [ ] Only cash disbursements - [ ] Equity investments and sales - [x] Both cash receipts and cash disbursements > **Explanation:** A cash book usually contains both cash receipts (incoming cash) and cash disbursements (outgoing cash), combining the functions of both a cash-receipts journal and a cash-payments journal. ### By maintaining a cash-payments journal, what does an organization primarily manage? - [ ] Equity investments - [ ] Bank loans - [ ] Credit sales - [x] Cash outflows > **Explanation:** By maintaining a cash-payments journal, an organization primarily manages its cash outflows, ensuring all payments are tracked and accounted for. ### Is it possible for a cash-payments journal to include non-cash transactions? - [ ] Yes, both cash and credit transactions should be recorded. - [ ] Only in exceptional cases. - [x] No, it should include only cash transactions. - [ ] Only when preparing financial statements. > **Explanation:** A cash-payments journal should include only cash transactions and not credit or other types of non-cash transactions to maintain clear cash flow records. ### Who benefits the most from maintaining a cash-payments journal? - [ ] Investors - [ ] Competitors - [x] The organization’s financial managers - [ ] Customer service department > **Explanation:** The organization's financial managers benefit the most as it provides accurate records of cash disbursements, assisting in budgeting and cash flow management. ### How frequently should entries be made in a cash-payments journal? - [ ] Monthly - [ ] Annually - [x] Daily - [ ] Only when large transactions occur > **Explanation:** Entries should be made daily in a cash-payments journal to ensure all cash outflows are recorded promptly and accurately. ### Which statement is true about a cash-payments journal? - [x] It helps in monitoring the organization’s cash expenditures. - [ ] It is used for recording cash inflows. - [ ] It consolidates all accounts receivable. - [ ] It is the primary source for tax return information. > **Explanation:** The primary purpose of a cash-payments journal is to help monitor the organization’s cash expenditures. ### What is one benefit of combining a cash-payments journal with a cash-receipts journal? - [ ] To reduce the number of accounting staff required. - [ ] To eliminate the need for general ledgers. - [x] To create a comprehensive view of cash inflows and outflows. - [ ] To maintain private records for tax avoidance. > **Explanation:** Combining a cash-payments journal with a cash-receipts journal creates a comprehensive cash book, providing a complete view of cash inflows and outflows. ### Which book integrates the records of both cash payments and cash receipts? - [ ] General ledger - [ ] Petty cash book - [ ] Inventory log - [x] Cash book > **Explanation:** A cash book integrates records of both cash payments and cash receipts.