Cash and other Receivables

Question 1

What constitutes as cash?

A. Money only
B. Money and negotiable instrumentas
C. Any negotiable instrument including promissory notes
D. Money and any instrument that is immediately payable in money and acceptable by the bank for deposit and immediate credit

Answer 1

D. Money and any instrument that is immediately payable in money and acceptable by the bank for deposit and immediate credit

Question 2

To be reported as cash and cash equivalents, the item must be:

A. Deposited in a financial institution, particularly a bank
B. Available for the redemption pf preference shares or bonds
C. Can be freely used in current operations
D. Set aside for the acquisition or construction of a property, plant, or equipment

Answer 2

C. Can be freely used in current operations

Question 3

Which of the following should be presented cash in the statement of financial position?

A. Postdated checks
B. IOUs from officers to be deduced from their salaries for the following month
C. Undelivered checks
D. NSF checks

Answer 3

C. Undelivered checks

Question 4

Which of the following cannot be shown as part of cash in the current assets section of the statement of financial position?

A. Cash in special checking account for payroll
B. Compensating balances
C. Cash deposited with utility company
D. Customer’s Checks

Answer 4

C. Cash deposited with utility company

Question 5

Which of the following describes unreleased checks?

A. They are outstanding checks
B. They are treated as certified checks
C. They are part of the payor’s cash balance
D. They should be a book-reconciling item, as the bank has deducted this amount from the cash balance in the bank statement

Answer 5

C. They are part of the payor’s cash balance

Question 6

Which of the following should not be considered cash?

A. Petty cash fund
B. Money orders
C. Coin, currency, and funds awaiting deposits
D. Postdated checks

Answer 6

D. Postdated checks

Question 7

Which of the following is incorrect with regard to the valuation of cash and cash equivalents?

A. Cash is calued at face value
B. Cash denominated in foreign currency is translated using the closing rate
C. Cash equivalents include interest that is to be received
D. Cash deposited in a bank that has filed for bankruptcy should be written down to its net realisable value

Answer 7

C. Cash equivalents include interest that is to be received

Question 8

Deposits in foreign countries that are also subject to certain foreign exchange restrictions should be:

A. Valued at current exchange rates and shown as current assets
B. Valued at historical exchange rates and shown as noncurrent assets
C. Valued at current exchange rates and shown as noncurrent assets
D. Valued at historical exchange rates and shown as current assets

Answer 8

A. Valued at current exchange rates and shown as current assets or C. Valued at current exchange rates and shown as noncurrent assets

Question 9

Which of the following should be considered cash equivalents?

A. Certificates of deposit
B. Money market with checking account privileges
C. Legally restricted compensating balances
D. Postdated checks

Answer 9

A. Certificates of deposit

Question 10

Travel advances should be reported as:

A. Supplies
B. Cash because they represent the equivalent of money
C. Investments
D. None of these

Answer 10

D. None of these