Expert Company Proof of Cash Quiz

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Which of the following items is a common example of cash equivalents?

Treasury bills (correct)

Land property

Raw materials inventory

Office equipment

In the bank reconciliation, what was the amount of notes receivable added to the adjusted balance?

$2,900 (correct)

$1,335

$596

$996

What effect did the interest expense have on the adjusted book balance?

Decreased it by $1,335

Increased it by $2,900

Decreased it by $596 (correct)

Increased it by $596

Which item is considered a deduction in the adjusting entries?

Accounts Receivable Signup and view all the answers

What was the effect of the bank error on the adjusted bank balance?

Decreased by $2,615 Signup and view all the answers

Which financial instrument presents insignificant risk of changes in value due to interest rate changes?

Treasury bills Signup and view all the answers

What is one of the ways to ensure internal control over cash receipts according to the text?

Using cash registers for over-the-counter receipts Signup and view all the answers

Which document should be maintained to ensure proper internal control over cash receipts?

Deposit slips and cash register tapes Signup and view all the answers

What is the primary tool a business uses to control cash receipts and payments?

Bank account Signup and view all the answers

In what situations should payments be made by cash according to the text?

For convenience Signup and view all the answers

What type of bank account has no restrictions on withdrawals unless above a specific limit?

Saving account Signup and view all the answers

What is another term for a demand account as per the text?

Checking account Signup and view all the answers

What is the primary purpose of using a bank account for controlling cash in a business?

To maintain a double record of cash transactions Signup and view all the answers

Which of the following is NOT a reason for disagreements between the balance per bank and balance per books in bank reconciliation?

Cash payments made by checks Signup and view all the answers

In bank reconciliation, what are 'collections by bank' referring to?

Funds collected by the bank on behalf of the business Signup and view all the answers

What is the purpose of a four-column bank reconciliation?

To agree on the cash balance between bank statement and depositor ledger Signup and view all the answers

In bank reconciliation, what does 'Not-sufficient-funds (NSF) checks' refer to?

Checks written by the business but unable to clear due to insufficient funds in the payer's account Signup and view all the answers

What is a common reason for discrepancies between the balance per bank and balance per books in bank reconciliation?

Errors in recording cash receipts Signup and view all the answers

How should companies classify restricted deposits held as compensating balances against short-term borrowing arrangements?

As part of current assets under 'Cash and cash equivalent items' Signup and view all the answers

In what section of the financial statement should companies report bank overdrafts?

Current liabilities Signup and view all the answers

When should companies disclose bank overdrafts separately according to the text?

When they are material Signup and view all the answers

What should companies do if they have compensating balance arrangements without any cash use restrictions?

Disclose the arrangements in the balance sheet Signup and view all the answers

When are bank overdrafts included as a component of cash according to the text?

When they are repayable on demand and integral to cash management Signup and view all the answers

What is the suggested classification for restricted deposits held as compensating balances against long-term borrowing arrangements?

Non-current assets under 'Investments' or other assets sections Signup and view all the answers

How do companies classify receivables for financial statement purposes?

As current or non-current based on whether they are short-term or long-term Signup and view all the answers

What distinguishes accounts receivable from notes receivable?

Accounts receivable are oral promises to pay, notes receivable are written promises to pay Signup and view all the answers

How do companies typically collect accounts receivable?

Within 30 to 60 days Signup and view all the answers

What do non-trade receivables arise from?

Various transactions Signup and view all the answers

How should overdrafts that do not meet specific conditions be reported?

As a current liability Signup and view all the answers

What is the most significant item in a company's current assets according to the text?

Trade receivables Signup and view all the answers