Cash and Cash Equivalents MC—Conceptual 21.. 21
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Whic Which h of of the the foll follow owin ing g is is not considered considered cash for nancial reporting purposes? a. Petty Petty cash cash funds funds and and chan change ge fund funds s b. Money orders, orders, certified certified checks, checks, and and personal personal checks checks c. Coin, Coin, curren currency cy,, and and availa available ble fund funds s d. Postda Postdated ted checks checks and I.O.U. I.O.U.'s 's Which Which of the the foll follow owing ing is consid consider ered ed cas cash? h? a. Certif Certifica icates tes of deposit deposit (Cs! (Cs! b. Money Money "arket "arket checki checking ng acco account unts s c. Money Money "ark "arket et savi savings ngs certif certifica icates tes d. Post Postda date ted d che check cks s Travel ravel advanc advances es should should be repor reported ted as a. suppli plies. b. cash because because they they represent represent the e#uival e#uivalent ent of of "oney "oney.. c. inve inves st"en t"entts. d. none none of the these se.. Which Which of the the followi following ng items items should should not not be include included d in the ash capti caption on on the balanc balance e sheet? a. Coins Coins and and curren currency cy in in the cash cash regi registe ster r b. Checks Checks fro" other parties parties presently presently in the cash regist register er c. $"ounts $"ounts on deposit deposit in in checking checking account account at at the the bank bank d. Post Postag age e sta sta"p "ps s on on han hand d $ll of of the foll folloi oing ng "ay "ay be incl include uded d under under the the headin heading g of cash cash e)cept e)cept a. currency. c. checking account balance. b. "oney "arket funds. d. savings account balance. In hic hich h accoun accountt are post post+da +dated ted chec checks ks recei received ved clas classif sified ied a. -eceivables. c. Cash. b. Prepaid e)penses. d. Payables. In hich hich accoun accountt are are postag postage e sta" sta"ps ps classi classifie fied d a. Cash. c. -eceivables. b. Office supplies. d. Inventory. 0hat 0hat is a co" co"pe pens nsat atin ing g bala balanc nce e a. 1avi 1aving ngs s accou account nt bala balanc nces es.. b. Margin Margin acco account unts s held held ith ith brok brokers ers.. c. 2e"pora 2e"porary ry invest"ent invest"ents s serving serving as collateral collateral for for outstanding outstanding loans. loans. d. Mini"u" Mini"u" deposits deposits re#uired re#uired to be "aintaine "aintained d in connection connection ith ith a borroing borroing arrange"ent arrange"ent.. Under hich section section of the balance balance sheet is cash cash restri restricted cted for plant plant e)pansion e)pansion reporte reported d a. Current assets. c. Current liabilities. b. 4on+current assets. d. 1tockholders' e#uity. # cash e$uiv e$uivalent alent is is a short%ter short%term& m& highl' highl' li$uid li$uid investm investment ent that that is readil' readil' convert convertible ible into into (nown amounts of cash and a. is accepta acceptable ble as a "eans "eans to to pay current current liabilit liabilities. ies. b. has a current current "arket "arket value value that that is greater greater than than its original original cost c. bears an interest interest rate rate that that is at least least e#ual to the the pri"e rate rate of interest interest at the the date of li#uidat li#uidation. ion. d. is so near its "aturity "aturity that that it presents presents insignific insignificant ant risk of changes changes in interest interest rates. rates. )an( )an( over overdra draft fts& s& if materi material& al& should should be a. reported reported as a deduction deduction fro" fro" the the current current asset asset sectio section. n. b. reporte reported d as a deduct deduction ion fro" fro" cash cash..
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c. netted against cash and a net cash a"ount reported. d. reported as a current liability. *eposits held as compensating balances a. usually do not earn interest. b. if legally restricted and held against short+ter" credit "ay be included as cash. c. if legally restricted and held against long+ter" credit "ay be included a"ong current assets. d. none of these. 0hich of the folloing is an appropriate reconciling ite" to the balance per bank in a bank reconciliation a. 6ank service charge. c. 6ank interest. b. eposit in transit. d. Chargeback for 417 check. 0hich of the folloing is not true a. 2he i"prest petty cash syste" in effect adheres to the rule of disburse"ent by check. b. 8ntries are "ade to the Petty Cash account only to increase or decrease the si9e of the fund or to ad:ust the balance if not replenished at year+end. c. 2he Petty Cash account is debited hen the fund is replenished. d. $ll of these are not true. $ Cash Over and 1hort account a. is not generally accepted. b. is debited hen the petty cash fund proves out over. c. is debited hen the petty cash fund proves out short. d. is a contra account to Cash. 2he :ournal entries for a bank reconciliation a. are taken fro" the balance per bank section only. b. "ay include a debit to Office 8)pense for bank service charges. c. "ay include a credit to $ccounts -eceivable for an 417 check. d. "ay include a debit to $ccounts Payable for an 417 check. 0hen preparing a bank reconciliation, bank credits are a. added to the bank state"ent balance. b. deducted fro" the bank state"ent balance. c. added to the balance per books. d. deducted fro" the balance per books.
MC- Computational +2. onsider the following, ash in )an( - chec(ing account of 13&/""& ash on hand of /""& Post%dated chec(s received totaling 3&/""& and erticates of deposit totaling 124&""". 0ow much should be reported as cash in the balance sheet? a. 13&/"". c. 1+&/"". b. 14&""". d. 131&/"". +4. ennison ompan' has cash in ban( of 1"&"""& restricted cash in a separate account of 3&"""& and a ban( overdraft in an account at another ban( of 1&""". ennison should report cash of
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a. =3,;;;. c. =<%,;;;. b. =<;,;;;. d. =<>,;;;. aniper ompan' has the following items at 'ear%end, ash in ban( 2"&""" Pett' cash 3"" !hort%term paper with maturit' of 2 months /&/"" Postdated chec(s 1&4"" aniper should report cash and cash e$uivalents of a. =%;,;;;. c. =%&,/;;. b. =%;,>;;. d. =%,%;;.
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awrence ompan' has cash in ban( of 1/&"""& restricted cash in a separate account of 4&"""& and a ban( overdraft in an account at another ban( of 2&""". awrence should report cash of a. =<>,;;;. c. =;,;;;. c. =>/,;;. b. =>;,&;;. d. =?;,/;;. 511+. 6f a pett' cash fund is established in the amount of 2/"& and contains 1/" in cash and 7/ in receipts for disbursements when it is replenished& the 8ournal entr' to record replenishment should include credits to the following accounts a. Petty Cash, =&. c. Cash, =3&@ Cash Over and 1hort, =&. b. Petty Cash, =<;;. d. Cash, =<;;. 511. 6f the month%end ban( statement shows a balance of 3&"""& outstanding chec(s are 12&"""& a deposit of 4&""" was in transit at month end& and a chec( for /"" was erroneousl' charged b' the ban( against the account& the correct balance in the ban( account at month end is a. =%,&;;. c. =%;,&;;. b. =%/,&;;. d. =?>,&;;. 5117. 6n preparing its ban( reconciliation for the month of #pril 2"1"& 0en(e& 6nc. has available the following information. )alance per ban( statement& 493"91" 37&14" :!; chec( returned with 493"91" ban( statement 4/" *eposits in transit& 493"91" /&""" 3,>; c. =>/,?3; b. =>/,3?; d. =>/,?; 512". ;inle'& 6nc.=s chec(boo( balance on *ecember 31& 2"1" was 21&2"". 6n addition& ;inle' held the following items in its safe on *ecember 31. >1 # chec( for 4/" from Peters& 6nc. received *ecember 3"& 2"1"& which was not included in the chec(boo( balance. >2 #n :!; chec( from @arner ompan' in the amount of 7"" that had been deposited at the ban(& but was returned for lac( of suAcient funds on *ecember 27. The chec( was to be redeposited on Banuar' 3& 2"11. The original deposit has been included in the *ecember 31 chec(boo( balance. >3 oin and currenc' on hand amounted to 1&4/". The proper amount to be reported on ;inle'Cs balance sheet for cash at *ecember 31& 2"1" is a. =%<,>;;. c. =%%,%;;. b. =%;,?;;. d. =%<,&;. 5121. The cash account shows a balance of 4/&""" before reconciliation. The ban( statement does not include a deposit of 2&3"" made on the last da' of the month. The ban( statement shows a collection b' the ban( of 74" and a customerCs chec( for 32" was returned because it was :!;. # customerCs chec( for 4/" was recorded on the boo(s as
/4"& and a chec( written for +7 was recorded as 7+. The correct balance in the cash account was a. =?&,&<%. c. =?&,%/. b. =?&,&?/. d. =?,/?/. 5122. 6n preparing its Da' 31& 2"1" ban( reconciliation& att o. has the following information available, )alance per ban( statement& /93191" 3"&""" *eposit in transit& /93191" /&4"" &,?;;. c. =>;,&;;. b. =%3,%&;. d. =><,&;. 5132. 6n preparing its #ugust 31& 2"1" ban( reconciliation& )ing orp. has available the following information, )alance per ban( statement& 93191" 21&/" *eposit in transit& 93191" 3&7"" Eeturn of customerCs chec( for insuAcient funds& 93"91" "" ?,%;; b. =><,3;; d. =>/,&;; Exercises EX 1 F $sset classification. 6elo is a list of ite"s. Classify each into one of the folloing balance sheet categoriesA
BBBB BBBB BBBB BBBB BBBB BBBB BBBB BBBB BBBB BBBB
a. b. <. %. >. ?. &. *. . /. 3. <;.
Cash c. 1hort+ter" Invest"ents -eceivables d. Other Co"pensating balances held in long+ter" borroing arrange"ents 1avings account 2rust fund Checking account Postage sta"ps 2reasury bills "aturing in si) "onths Post+dated checks fro" custo"ers Certificate of deposit "aturing in five years Co""on stock of another co"pany (to be sold by ece"ber ><, this year! Change fund
