Expert Company Proof of Cash Quiz
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Questions and Answers

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?

<p>Accounts Receivable (A)</p> Signup and view all the answers

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

<p>Decreased by $2,615 (B)</p> Signup and view all the answers

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

<p>Treasury bills (B)</p> Signup and view all the answers

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

<p>Using cash registers for over-the-counter receipts (A)</p> Signup and view all the answers

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

<p>Deposit slips and cash register tapes (B)</p> Signup and view all the answers

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

<p>Bank account (D)</p> Signup and view all the answers

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

<p>For convenience (D)</p> Signup and view all the answers

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

<p>Saving account (D)</p> Signup and view all the answers

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

<p>Checking account (B)</p> Signup and view all the answers

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

<p>To maintain a double record of cash transactions (D)</p> 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?

<p>Cash payments made by checks (A)</p> Signup and view all the answers

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

<p>Funds collected by the bank on behalf of the business (D)</p> Signup and view all the answers

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

<p>To agree on the cash balance between bank statement and depositor ledger (A)</p> Signup and view all the answers

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

<p>Checks written by the business but unable to clear due to insufficient funds in the payer's account (A)</p> 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?

<p>Errors in recording cash receipts (D)</p> Signup and view all the answers

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

<p>As part of current assets under 'Cash and cash equivalent items' (D)</p> Signup and view all the answers

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

<p>Current liabilities (C)</p> Signup and view all the answers

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

<p>When they are material (B)</p> Signup and view all the answers

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

<p>Disclose the arrangements in the balance sheet (B)</p> Signup and view all the answers

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

<p>When they are repayable on demand and integral to cash management (A)</p> Signup and view all the answers

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

<p>Non-current assets under 'Investments' or other assets sections (B)</p> Signup and view all the answers

How do companies classify receivables for financial statement purposes?

<p>As current or non-current based on whether they are short-term or long-term (C)</p> Signup and view all the answers

What distinguishes accounts receivable from notes receivable?

<p>Accounts receivable are oral promises to pay, notes receivable are written promises to pay (C)</p> Signup and view all the answers

How do companies typically collect accounts receivable?

<p>Within 30 to 60 days (B)</p> Signup and view all the answers

What do non-trade receivables arise from?

<p>Various transactions (D)</p> Signup and view all the answers

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

<p>As a current liability (D)</p> Signup and view all the answers

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

<p>Trade receivables (C)</p> Signup and view all the answers

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