CFAS LONG QUIZ- MIDTERM

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

• A. Cash and cash equivalents
• B. Treasury bills
• C. Current investment
• D. Cash equivalents

Which of the following is least likely a component of cash and cash equivalents in the statement of financial position?

• A. Cash in bank
• B. Cash equivalents
• C. Cash fund
• D. Cash surrender value

Which cash fund is included from the cash and cash equivalent balance?

• A. Fund set aside for acquisition of equipment and machinery.
• B. Fund set up in a bank exclusively for payment of employees’ compensation.
• C. Fund for the redemption of preference shares.
• D. Fund established for settlement of long-term obligations.

Which of the following would not form part of the cash and cash equivalent balance?

• A. Customer’s postdated check
• B. Drawer Issued stale check
• C. Undelivered check
• D. All of the foregoing

Internal control feature that is specific to petty cash is

• A. Segregation of duties
• B. Independent verification
• C. Authorization
• D. Imprest system

All of the following can be classified as cash and cash equivalents, except

• A. Bank drafts
• B. Commercial paper due for repayment in 90 days
• C. Investment in equity securities
• D. Redeemable preference shares acquired and due in 60 days

Entity A acquires equipment by issuing shares of stocks. How should Entity A report the transaction in the statement of cash flows?

• a. Operating activities
• b. Investing activities
• c. Financing activities
• d. Not reported

Entity A, a financial institution, received cash dividends from its investments in marketable securities during the year. How will the dividends be presented in Entity A’s statement of cash flows?

• a. as investing activity
• b. as operating activity
• c. as financing activity
• d. a or b

Property, plant and equipment are defined as

• a. Assets held for sale in the ordinary course of business.
• b. Assets held to earn rentals or for capital appreciation.
• c. Tangible assets held for use in the production or supply of goods or services or for administrative purposes.
• d. Tangible assets held for use in the production or supply of goods or services, for rental to others, or for
• administrative purposes and expected to be used during more than one reporting period.

Which is not an essential characteristic of property, plant and equipment?

• a. The property, plant and equipment are tangible assets.
• b. The property, plant and equipment are used in production or supply' of goods and services, for rental purposes
• and for administrative purposes.
• c. The property, plant and equipment are expected to be used over a period of more than one year.
• d. The property, plant and equipment are subject to depreciation.