Cash and Cash Equivalents

b. Separately as noncurrent asset with appropriate disclosure.

If material, deposits in foreign bank which are subject to foreign exchange restriction shall be classified a. Separately as current asset, with appropriate disclosure. b. Separately as noncurrent asset with appropriate disclosure. c. Be written off as loss. d. As part of cash and cash equivalents.

c. Deposits in transit

If the balance shown in the bank statement is less than the correct cash balance and neither the entity nor the bank has made any errors, there must be a. Deposits credited by the bank but not yet recorded by the entity it book b. Outstanding checks c. Deposits in transit d. Bank charges not yet recorded by the entity

d. Postdated check

Which of the following should not be considered "cash" a. Change fund b. Certified check C.Personal check d. Postdated check

C. Is debited when the petty cash fund proves out short.

A Cash Over and Short account a. Is not generally accepted. b. Is debited when the petty cash fund proves out over. C. Is debited when the petty cash fund proves out short. d. Is a contra account to cash.

d. A schedule that accounts for the differences between an entity's cash balance as shown in the bank statement and the cash balance shown in the general ledger.

A bank reconciliation is a. A formal financial statement that lists all of the bank account balances of an entity. b. A merger of two banks that previously were competitors. C. A statement sent by the bank to depositor on a monthly basis. d. A schedule that accounts for the differences between an entity's cash balance as shown in the bank statement and the cash balance shown in the general ledger.

d. Is so near maturity that it presents insignificant risk of change in interest rate.

A cash equivalent is a short-term, highly liquid investment that is readily convertible into known amount of cash and a.Is acceptable as a means to pay current liabilities. b. Has a current market value that is greater than the original cost. c.Bears an interest rate that is at least equal to the prime interest rate at the date of liquidation. d. Is so near maturity that it presents insignificant risk of change in interest rate.

C. Is a four-column bank reconciliation showing reconciliation of cash balances per book and per bank at the beginning and end of the current month and-reconciliation of' cash receipts and cash disburséments of the bank and the depositor during the current month.

A proof of cash a. Is a physical count of currencies on hand at the end of reporting period. b. Is a formal statement showing the total cash receipts during the year. C. Is a four-column bank reconciliation showing reconciliation of cash balances per book and per bank at the beginning and end of the current month and-reconciliation of' cash receipts and cash disburséments of the bank and the depositor during the current month. d. Is a summary of cash receipts and cash payments.

c. Discovering cash receipts that have been recorded but have not been deposited

A proof of cash would be useful for a. Discovering cash receipts that have not been recorded in the journal b. Discovering time lag in making deposits c. Discovering cash receipts that have been recorded but have not been deposited d. Discovering separation of incompatible duties of employees

a.-The segregated account should be reported as a noncurrent asset, the regular account should be reported as a current asset, and the overdraft should be reported as a current liability

At the end of the current year, an entity had cash accounts at three different banks. One account is segregated solely for payment into a bond sinking fund. A second account, used for branch operations, is overdrawn. The third account, used for regular corporate operations, has a positive balance. How should these accounts be reported? ( a.-The segregated account should be reported as a noncurrent asset, the regular account should be reported as a current asset, and the overdraft should be reported as a current liability b. The segregated and regular accounts should be reported as current assets, and the overdraft should be reported as a current liability c. The segregated account should be reported as a noncurrent asset, and the regular account should be reported as a current asset net of the overdraft d. The segregated and regular accounts should be reported as current assets net of the overdraft

d. Reported as a current liability.

Bank overdraft generally should be a. Reported as a deduction from current assets. b. Reported as a deduction from cash. c. Netted against cash and a net cash amount reported. d. Reported as a current liability.

b. All items except bank errors, outstanding checks and deposits in transit.

Bank reconciliations are normally prepared on a monthly basis to identify adjustments needed in the depositor's records and to identify bank errors. Adjustments on the part of the depositor should be recorded for a. Bank errors, outstanding checks and deposits in transit. b. All items except bank errors, outstanding checks and deposits in transit. c. Book errors, bank errors, deposits in transit and outstanding checks. d. Outstanding checks and deposits in transit.

a. Cash on hand and demand deposits

Cash comprises a. Cash on hand and demand deposits b. Cash on hand, demand deposits and cash equivalents C. Cash on hand and cash equivalents d. Demand deposits and cash equivalents

c. Short-term, highly liquid investments that are readily convertible to known amount cash and which are subject to an insignificant risk of changes in value

Cash equivalents are a. Short-term highly liquid investments that are readily convertible to known amount of cash b. Investments subject to an insignificant risk of changes in value c. Short-term, highly liquid investments that are readily convertible to known amount cash and which are subject to an insignificant risk of changes in value d. Short and long-term highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value

a. Deposits credited by the bank but not yet recorded by the entity

If the cash balance shown in the accounting records is less than the correct cash balance and neither the entity nor the bank has made any errors, there must be a. Deposits credited by the bank but not yet recorded by the entity b. Deposits in transit c. Outstanding checks d. Bank charges not yet recorded by the entity

c. Added to the book balance

In preparing a bank reconciliation, interest paid by the bank on the account is a. Added to the bank balance b. Subtracted from the bank balance c. Added to the book balance d. Subtracted from the book balance

c. Deposit in transit

In preparing a monthly bank reconciliation, which of the following would be added to the balance per bank statement to arrive at the correct cash balance? a. Outstanding check b. Bank service charge c. Deposit in transit d. A customer's note collected by the bank on behalf of the depositor

d. Expense accounts are debited

In reimbursing the petty cash fund, which of the following is true? A. Cash in debited b. Petty cash is debited C. Petty cash is credited d. Expense accounts are debited

b. Money kept on hand for making minor disbursements of coin and currency rather than by writing cheek's

Petty Cash fund is a.Separately classified as current asset b. Money kept on hand for making minor disbursements of coin and currency rather than by writing cheek's c. Set aside for the payment of payroll d. Restricted cash

c. Deposit of another entity is credited by the bank to the account of the depositor

TWhich of the following would not require an adjusting entry on the depositor's books? a. NSF check from customer b. Check in payment of account payable as recorded by the depositor is overstated c. Deposit of another entity is credited by the bank to the account of the depositor d. Bank service charge

d. Imprest system

The internal control feature specific to petty cash is a. Separation of duties b. Assignment of responsibility C. Proper authorization d. Imprest system

C. When the fund is created and when the size of the fund is increased.

The petty cash fund account under the imprest fund system is debited a. Only when the fund is created. b. When the fund is created and everytime it is replenished. C. When the fund is created and when the size of the fund is increased. d. When the fund is created and when the fund is decreased.

b. Noncurrent assets

Under which classification is cash restricted for plant expansion reported? a.Current assets b. Noncurrent assets c.. Current liabilities d. Equity

d. Minimum deposit required to be maintained in connection with a borrowing arrangement

What is a compensating balance? a. Saving account balance b. Demand deposit account balance C. Temporary investment serving as collateral for outstanding loan d. Minimum deposit required to be maintained in connection with a borrowing arrangement

a. Unrestricted in use for current operations

What is the basic requirement for cash and cash equivalent? a. Unrestricted in use for current operations b: Available for the purchase of property, plant and equipment C. Set aside, for the liquidation of long-term debt d. Deposited in bank

d. To effectively control cash disbursements

What is the major purpose of an imprest petty cash fund? a. To effectively plan cash inflows and outflows b. To ease the payment of cash to vendors c. To determine the honesty of the petty cashier d. To effectively control cash disbursements

a. Accounts receivable

What is the treatment of customers' postdated checks? a. Accounts receivable b. Prepaid expenses C. Cash d. Accounts payable

b. Combined responsibility for handling and recording cash

Which of the following is not a characteristic of a system of cash control? a. Use of a voucher system b. Combined responsibility for handling and recording cash c. Daily deposit of all cash received d. Internal audits at irregular intervals

b. A three-year treasury note maturing on January 31 of the next year purchased by the entity on October 1

Which of the following is not considered as a cash equivalent? a. A three-year treasury note maturing on January 31 of the next year purchased by the entity on December 1 of the current year b. A three-year treasury note maturing on January 31 of the next year purchased by the entity on October 1 of the current year c. A 90-day T-bill d. A 60-day money market placement

A. Note receivable collected by bank in favor of the depositor and credited to the account of the depositor

Which of the following items must be added to the cash balance per ledger in preparing a bank reconciliation which ends with adjusted cash balance? A. Note receivable collected by bank in favor of the depositor and credited to the account of the depositor B. NSF customer check C. Service charge d. Erroneous bank debit

b. Outstanding check

Which of the following must be deducted from the bank statement balance in preparing a bank reconciliation which ends with adjusted cash balance? a. Deposit in transit b. Outstanding check c. Reduction of loan charged to the account of the depositor d. Certified check

d. IOUs

Which of the following shall not be considered cash for financial reporting purposés? A. Petty cash fund b. Money orders C. Coin and currency corrent d. IOUs

C. The petty cash account is debited when the fund is replenished.

Which of the following statements in relation to an imprest petty cash is incorrect? a. The imprest petty cash system in effect adheres to the rule of disbursement by check. b. Entries are made to the petty cash account only to increase or decrease the size of the fund or to adjust the balance if not replenished at year-end. C. The petty cash account is debited when the fund is replenished. d. The petty cash fund is reported as part of current assets.