ACCCOB2Chapter 2 Exercises

School: De La Salle University - Course: ACC COB2 - Subject: Accounting

Chapter 2 CASH AND CASH EQUIVALENTS THEORY MULTIPLE CHOICE: 1.Cash includes a.Money only b.Money and negotiable instruments 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. 2.To be reported as "cash and cash equivalents", the cash equivalent must be a.Deposited in a financial institution, particularly a bank b.Available for the redemption of preference shares or bonds c.can be freely used in current operations d. Set aside for acquisition of construction of items of property, plant and equipment 3.Which of the following should be presented as cash in the statement of financial position? a.Postdated checks received b.IOUs from officers to be deducted from their salaries of the following month c.Undelivered checks d.NSF checks 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 5.Unreleased checks a.Are outstanding checks b.Are treated as certified checks c.Are part of the payor's cash balance d.Should be a book-reconciling item since the bank has deducted this amount at arriving at the cash balance in the bank statement.

126.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 7.Which of the following is incorrect with regard to the valuation of cash and cash equivalents? a.Cash is valued 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 realizable value. 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 presented as noncurrent assets c.Valued at current exchange rates and presented as noncurrent assets d. Valued at historical exchange rates and presented as current assets 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 10.Travel advances should be reported as a.Supplies. b.Cash because they represent the equivalent of money. c.Investments. d.None of these.