Cash and Cash Equivalents (F3:M1)

Question 1

when doing a bank rec, what will cause the balance per books to be higher than balance per bank?

Answer 1

deposits in transit

service charges

errors

NSF

Question 2

when doing a bank rec, what will cause the balance per bank to be higher than balance per books?

Answer 2

outstanding checks

bank collections (bank collects on depositor’s behalf)

errors

interest income

Question 3

what is an outstanding check?

Answer 3

business sends to supplier in one month, but supplier doesn’t actually cash check until next month

check reduces amount per books, but has yet to reduce amount per bank

Question 4

what are cash equivalents?

Answer 4

short-term, liquid investments that are near maturity (original maturity date within 90 days)

Question 5

what is a negative balance “overdraft” considered?

Answer 5

a current liability

Question 6

T or F, balances at the same bank can be netted.

Answer 6

T

Question 7

a check should not be deducted from the checkbook (cash) balance until it is ___.

Answer 7

postdated or disbursed

Question 8

if a check is voided on Jan 2nd, what adjustment must be made to the balance per books on Dec 31st?

Answer 8

add amount of voided check to balance per books

Question 9

cash restricted for a long-term obligation should be reported as what in the notes to FS?

Answer 9

a long-term asset, tied with its intended restriction