cash & cash equiv

• As contemplated in accounting, cash includes

  Money and any negotiable instrument that is payable in money and, acceptable by the bank
• To be reported as "cash and cash equivalent", the cash and cash equivalent must be

  Unrestricted in use for current operations
• Petty cash fund is

  Money kept on hand for making minor disbursements of coin and currency rather than by writing checks
• What is the major purpose of an imprest petty cash fund?


  To effectively control cash disbursements
• Who is responsible, at all times, for the amount of the petty cash fund

  The petty cash custodian
• The internal control feature that is specific to petty cash is


  Imprest system
• What happens when a petty cash is in use?

  Expenses paid with petty cash are recorded when the fund is replenished
• Which of the following is not an appropriate procedure for controlling the petty cash fund?

  The petty cash custodian files receipts by category of expenditure after their presentation to the general cashier, so that variations in different types of expenditures can be monitored.
• Usually, if the petty cash fund is not reimbursed just prior to year-end and an appropriate adjusting entry is not made


  cash will be overstated and expenses understated
• When a petty cash fund is used, which of the following is true?

  The reimbursement of the petty cash fund should be credited to the cash account
• The following statements pertain to accounting for petty cash fund. Which statement is false?

  With the establishment of an imprest petty cash fund, one person is given the authority and responsibility for issuing checks to cover minor disbursements.
• An imprest bank account is

  an account used to make a specific amount of cash available for a limited purpose
• Compensating balances represent


  funds in a checking account that cannot be spent
• Cash equivalents are


  short-term highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of change in value
• Which of the following items should properly form part of the Cash account?

  Savings account in bank
• Which of the following is usually considered cash?

  Checking accounts
• Which of the following is part of the cash account?

  Unreleased checks which were drawn before the balance sheet date but held for later delivery to creditors.
• Which of the following is considered cash?

  Money market checking accounts
• ABC, Inc. placed P1.5 million in the money market for 60 days subject to pre-termination. The P1.5 million should be


  Included as part of cash and cash equivalents with the appropriate disclosure in the notes to the financial statements.
• Cash equivalents would include

  Debt instruments with maturity dates of less than three months from date of purchase.
• Which can qualify as cash equivalent?


  Preferred shares with specified redemption date and acquired three months before redemption date
• Cash may not include

  restricted use cash
• The one item that should be excluded from cash and cash equivalent on the December 31, 2023 balance sheet of Kurdapya Company is

  A P500,000 time deposit which matures on one year
• Which among the following is not considered as a cash equivalent for purposes of a cash flow statement?

  A three-year treasury note maturing on May 30, 2023 purchased by the enterprise on January 2, 2023
• Which of the following would not be classified as cash?

  Postdated checks
• Cash equivalents generally would not include short-term investments in


  held-to-maturity securities.
• Valuation of the cash account in the balance sheet

  Face value
• Which is false concerning valuation of cash and cash equivalents?

  Cash equivalents should be valued at maturity value, meaning face value plus interest
• Bank reconciliation


  explains the difference between the bank balance and the balance shown in the depositor's records.
• A bank reconciliation is a


  drawn up by us to verify our cash book balance with the bank statement balance.
• When preparing a bank reconciliation, bank credits not yet recorded in the depositor's books are

  added to the balance per books.
• If the cash balance shown in a company's accounting records is less than the correct cash balance, and neither the company nor the bank has made any errors, there must be


  deposits credited by the bank but not yet recorded by the company.
• 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?

  Note receivable collected by bank in favor of the depositor and credited to the account of the depositor
• In preparing a bank reconciliation, interest paid by the bank on the account is

  added to the book balance
• Bank reconciliations are usually prepared on a monthly basis upon receipt of the bank statement to identify either bank errors or items that need to be adjusted on the depositor's books. The adjustments should be made for

  all items except deposits in transit, outstanding checks, and bank errors.
• Bank reconciliations are normally prepared on a monthly basis to identify adjustments needed in the depositor's records and to identify bank errors. Adjustments should be recorded for


  all items except bank errors, outstanding checks, and deposits in transit.
• Bank statements provide information about all of the following except

  errors made by the company
• Which of the following must be deducted from the bank statement balance in preparing a bank reconciliation which ends with adjusted cash balance?

  Outstanding check
• Everything else being equal, the balance of cash reported in a customer's bank statement will be less than the balance shown in the customer's own records if there are


  deposits in transit
• If the balance shown on a company's bank statement is less than the correct cash balance, and neither the company nor the bank has made any errors, there must be

  deposits in transit