2A Cash and cash equivalents

Question 1

What are cash equivalents?

Answer 1

short-term, highly liquid investments

Examples: treasury bills, commercial paper and money market funds.

Question 2

Calculate cash and cash equivalents balance

Answer 2

Beginning cash and cash equivalents
\+ deposits
- disbursements
\_\_\_\_\_\_\_\_\_\_\_\_\_
Ending balance of cash and cash equivalents

Question 3

Bank reconciliation: Bank balance

Answer 3

Beginning balance
\+ deposits in transit
- outstanding checks 
\+ or - Errors
\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Correct cash balance

Question 4

Bank reconciliation: Book balance

Answer 4

Beginning balance
\+ interest earned
\+ Notes receivable collected
- NSF fees
- Service fees
\+ or - errors
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
correct cash balance

Question 5

Journal entries are required for the book side of the bank reconciliation.

Answer 5

No entries are required for the bank side.