Cash and Equivalents

What are cash equivalents?

• Cash equivalents are tangible assets

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

• Cash equivalents are long-term, illiquid investments

• Cash equivalents are subject to high risk of changes in value

List three types of cash equivalents.

• Treasury bills, money market funds, commercial paper

• Savings accounts

• Real estate

• Stocks

What is the purpose of a bank reconciliation?

• To ensure the accuracy of financial records by comparing bank statement with internal records.

• To walk the dog

• To bake cookies

• To learn how to juggle

Explain the bank reconciliation process.

• The bank reconciliation process involves counting physical cash in the bank vault

• Bank reconciliation is only necessary for small businesses

• Bank reconciliation is the process of reconciling customer accounts with the bank

• The bank reconciliation process is a way to ensure the accuracy of a company's financial records by comparing the balances in the company's accounting records to the balances reported on the bank statement.

How often should bank reconciliations be performed?

• Weekly

• Monthly

• Yearly

• Quarterly

What are the common items found on a bank statement?

• Credit card numbers, Social Security numbers, Passwords

• Transaction details, account balance, fees, interest earned, account number

What are the common items found on a company's books?

• Inventory, accounts payable, net income, dividends, cash

• Assets, liabilities, equity, revenue, expenses

What is the difference between the bank statement balance and the book balance?

• The difference between the bank statement balance and the book balance is usually caused by outstanding checks, deposits in transit, bank fees, or errors.

• The difference is caused by the bank's preference for odd numbers in their calculations

• The difference is due to the bank statement being written in a different language than the book balance

• The difference is caused by weather conditions affecting the bank's operations

How do outstanding checks affect the bank reconciliation process?

• Outstanding checks increase the bank balance in the bank reconciliation process.

• Outstanding checks have no impact on the bank balance in the bank reconciliation process.

• Outstanding checks decrease the bank balance in the bank reconciliation process.

• Outstanding checks are not considered in the bank reconciliation process.

What is the impact of deposits in transit on the bank reconciliation?

• Deposits in transit will be subtracted from the bank statement balance during the bank reconciliation.

• Deposits in transit will be added to the bank statement balance during the bank reconciliation.

• Deposits in transit are only considered if they are less than $100.

• Deposits in transit have no impact on the bank reconciliation process.