Statement of Financial Position - LO5

Which are below are not cash and cash equivalents?

• Cash in banks

• Short-term government bonds

• Banker’s acceptance

• Short-term notes receivable

What is the common characteristic of current assets?

• Collectable

• Cash form

• Cash form or at least easily to be converted to cash

• Cash security

Which is among these current assets are less likely to be converted to cash in comparison?

• Prepaid expense

• Inventories

• Accounts receivable

• Fixed deposits

If Company BX paid RM30,000 for six months of office rent on January 1, what is the amount should be recorded in prepaid expense account as at January 1?

• RM30,000

• RM5,000

• RM25,000

• RM35,000

What is the likely risk for the business if they have insufficient level of cash?

• Difficult financial projection

• Shorter accounting cycle

• Lower sales

• Bankruptcy