Multiple-Choice-Theory

School: University of St. La Salle - Bacolod City - Course: ACCT 202 - Subject: Accounting

Multiple Choice Theory - ACCT 202 1.What is the basic requirement for "cash and cash equivalent"? a.Unrestricted in use for current operations b.Available for the purchase of property, plant, and equipment c.Set aside for the liquidation of long-term debt d.Deposited in bank 2.Which of the following shall not be considered cash for financial reporting purposes? a.Petty cash fund b.Money orders c.Coin and currency d.IOUs 3.Which of the following is usually considered cash? a.Certificate of deposit b.Checking account c.Money market saving certificate d.Treasury bill 4.A cash equivalent is a short-term, highly liquid investment that is readily convertible into known amount of cash and... a.Is acceptable as a means to pay current liabilities. b.Has a current market value that is greater than the original cost. c.Bears an interest rate that is at least equal to the prime rate of interest at the date of liquidation. d.Is so near maturity that it present insignificant risk of change in interest rate. 5.All of the following can be classified as cash and cash equivalents, except... a.Redeemable preference shares acquired and due in 60 days b.Commercial papers held and due for repayment in 90 days c.Equity investments d.A bank overdraft 6.Which of the following statements is incorrect concerning measurement of cash and cash equivalents? a.Cash is measured at face value b.Cash in foreign currency is measured at the current exchange rate c.If a bank or financial institution holding the funds of the entity is in bankruptcy or financial difficulty, cash shall be written down to estimated realizable value d.Cash equivalents shall be measured at maturity value, meaning face value plus interest 7.If material, deposits in foreign bank which are subject to foreign exchange restriction shall be classified... a.Separately as current asset, with appropriate disclosure. b.Separately as noncurrent asset with appropriate disclosure. c.Be written off as an extraordinary loss. d.As part of cash and cash equivalents. 8.Bank overdraft generally should be... a.Reported as a deduction from current assets. b.Reported as a deduction from cash. c.Netted against cash and a net cash amount reported. d.Reported as a current liability.

9.What is compensating balance? a.Saving account balance b.Margin account held with broker c.Temporary investment serving as collateral for outstanding loan d.Minimum deposit required to be maintained in connection with a borrowing arrangement 10.A compensating balance... a.Must be included in cash and cash equivalent b.Which is legally restricted and related to a long-term loan is classified as current asset. c.Which is legally restricted and related to a short-term loan is classified separately as current asset. d.Which is not legally restricted as to withdrawal is classified separately as current asset. 11.Which of the following should not be included in "cash"? a.Travel cash advance b.Certified check c.Personal check d.Manager check 12.All of the following may be included in "cash", except... a.Currency b.Money market instrument c.Checking account balance d.Saving account balance 13.Under which classification is "cash restricted for plant expansion" reported? a.Current assets b.Noncurrent assets c.Liabilities d.Equity 14.Deposits held as compensating balance... a.Usually do not earn interest. b.If legally restricted and held against short-term credit may be included as cash. c.If legally restricted and held against long-term credit may be included among current assets. d.None of these 15.What is the treatment of customers' postdated checks? a.Accounts receivable b.Prepaid expenses c.Cash d.Accounts payable