Chapters 1, 2, 3

Which of the following is considered cash equivalents?

• a. Demand deposit

• b. Money market checking accounts

• c. Money market savings certificates

• d. Postdated checks

Bank overdrafts, if material, should be

• a. Reported as a deduction from the current asset section.

• b. Reported as a deduction from cash in bank balance of the same bank.

• c. Netted against cash and a net cash amount reported.

• d. Reported as a liability.

The petty cash fund account under the imprest fund system is credited

• a. When the fund is decreased and unreplenished at year-end.

• b. When the fund is created and every time 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.

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

In preparing monthly bank reconciliation, all but one of the following is deducted in the cash balance per book?

• a. DAUD

• b. DAIF

• c. Errors

• d. NSF

Which of the following is not considered cash for financial reporting purposes?

• a. Petty cash funds and change funds

• b. Money orders, certified checks, and personal checks

• c. Coin, currency, and available funds

• d. Postdated checks and I.O.U.'s

Which of the following is considered cash?

• a. Certificate of deposit (CDs)

• b. Money market checking accounts

• c. Money market savings certificates

• d. Postdated checks

Travel advances should be reported as

• a. Supplies

• b. Cash because they represent the equivalent of money.

• c. Investments

• d. None of these.

Which of the following items should not be included in the Cash caption on the balance sheet?

• a. Coins and currency in the cash register

• b. Checks from other parties presently in the cash register

• c. Amounts on deposit in checking account at the bank

• d. Postage stamps on hand

A cash equivalent is a short-term, highly liquid investment that is readily convertible into known amounts of cash and

• a. Is acceptable as a means to pay current liabilities.

• b. Has a current market value that is greater than its original cost.

• c. Bears an interest rate that is at least equal to the prime rate of interest at the date of liquidation.

• d. Is so near its maturity that it presents insignificant risk of changes in interest rates.