CASH & CASH EQUIVALENTS

Question 1

This includes money and any other negotiable instrument that is payable in money and accepted by the bank for deposit and immediate credit

Answer 1

Cash

Question 2

Checks that are unacceptable by the bank for deposit and immediate credit

Answer 2

Postdated checks

Question 3

Cash includes

Answer 3

Checks, Bank Overdrafts, and Money orders

Question 4

A cash must be

Answer 4

unrestricted in use

Question 5

What are the three cash items?

Answer 5

Cash on Hand, Cash in Bank, Cash fund

Question 6

Undeposited cash collections and other cash items awaiting deposit

Answer 6

Cash on Hand

Question 7

What are the 5 examples of COH?

Answer 7

Customer’s checks, Cashier’s/Manager’s checks, Traveler’s checks, Bank drafts, and Money orders

Question 8

Demand deposit or checking account and saving deposit which are unrestricted as to withdrawal

Answer 8

Cash in Bank

Question 9

Set aside for current purposes

Answer 9

Cash fund

Question 10

What are the 3 examples of Cash fund?

Answer 10

Petty cash fund, Payroll fund, and Dividend fund

Question 11

Short term and highly liquid investments that are readily convertible to cash and so near their maturity date that they present insignificant risk of changes in value due to changes in interest rates

Answer 11

Cash Equivalents

Question 12

It is qualified as cash equivalents if?

Answer 12

It is a highly liquid investment that is acquired three months before its maturity date

Question 13

What are the 4 examples of cash equivalents?

Answer 13

1. Three-month BSP treasury bill
2. Three-year BSP treasury bill purchased three months before maturity date
3. Three-month time deposit
4. Three-month money market instrument or commercial paper

Question 14

This cannot be qualified as cash equivalents

Answer 14

Equity securities, because shares do not have a maturity date

Question 15

Preference shares can be qualified as cash equivalents if

Answer 15

It has a specified redemption date and acquired three months before the redemption date

Question 16

Cash is measured at

Answer 16

face value

Question 17

Examples of cash funds under current asset (short-term cash funds)

Answer 17

Petty cash fund, Payroll fund, Travel fund, Interest fund, Dividend fund, Tax fund

Question 18

Examples of cash funds under non-current asset (long-term cash funds)

Answer 18

Sinking fund, Preference share redemption fund, contingent fund, insurance fund, fund for acquisition/construction of property, plant and equipment

Question 19

Classification of cash fund as current or non-current should be

Answer 19

Parallel to the classification or the related liability

Question 20

Sinking fund shall be classified as current asset if

Answer 20

It is set aside to pay a bond payable that is due within one year after the end of the reporting period

Question 21

A cash fund shall be classified as non-current asset if

Answer 21

It is set aside for the acquisition of a non-current asset

Question 22

Bank overdraft is a

Answer 22

Current liability

Question 23

Check merely drawn and recorded but not given to the payee before the end of the reporting period

Answer 23

Undelivered check

Question 24

Check drawn, recorded and already given to the payee but it bears a date subsequent to the end of the reporting period (check issued on a later date)

Answer 24

Postdated check

Question 25

Check not encashed by the payee within a relatively long period of time (max 6 months)

Answer 25

Stale check

Question 26

Cash is less than the balance per book

Answer 26

Cash shortage

Question 27

Cash is more than the balance per book

Answer 27

Cash overage

Question 28

A system of control of cash which requires that all cash receipts should be deposited intact and all cash disbursements should be made by means of check

Answer 28

Imprest system

Question 29

Money set aside to pay small expenses

Answer 29

Petty cash fund

Question 30

Two methods of handling the petty cash

Answer 30

1. Imprest fund system

2. Fluctuating fund system