CASH AND CASH

EQUIVALENTS
Thomas Mariano
1. Which of the following should NOT be
considered as cash?
A. Change fund
B. Certified check
C. Personal check
D. Postdated check
1. Which of the following should NOT be
considered as cash?
A. Change fund
B. Certified check
C. Personal check
D. Postdated check
2. Which of the following should NOT be
considered as cash?
A. Petty cash fund
B. Money orders
C. Coin and currency
D. IOUs
2. Which of the following should NOT be
considered as cash?
A. Petty cash fund
B. Money orders
C. Coin and currency
D. IOUs
3. What is a compensating balance?
A. A saving account balance
B. A demand deposit account balance
C. Temporary investment serving as collateral for outstanding
loan
D. Minimum deposit required to be maintained in connection
with a borrowing arrangement
3. What is a compensating balance?
A. A saving account balance
B. A demand deposit account balance
C. Temporary investment serving as collateral for outstanding
loan
D. Minimum deposit required to be maintained in connection
with a borrowing arrangement
4. 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 a current asset.
4. 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 a current asset.
5. Bank overdraft 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.
5. Bank overdraft 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.
6. Deposits in foreign bank which are
subject to foreign exchange restriction
should be classified as
A. Separately as current asset with appropriate disclosure.
B. Separately as noncurrent asset with appropriate disclosure.
C. Be written off as loss.
D. As part of cash and cash equivalents.
6. Deposits in foreign bank which are
subject to foreign exchange restriction
should be classified as
A. Separately as current asset with appropriate disclosure.
B. Separately as noncurrent asset with appropriate disclosure.
C. Be written off as loss.
D. As part of cash and cash equivalents.
7. Petty cash fund is
A. Separately classified as current asset
B. Money kept on hand for making minor disbursements
of coin and currency rather than by writing checks.
C. Set aside for the payment of payroll.
D. Restricted cash.
7. Petty cash fund is
A. Separately classified as current asset
B. Money kept on hand for making minor disbursements
of coin and currency rather than by writing checks.
C. Set aside for the payment of payroll.
D. Restricted cash.
8. What is the major purpose of an imprest
cash fund?
A. To effectively plan cash inflows and outflows
B. To ease the payment of cash to vendors
C. To determine the honesty of the petty cashier
D. To effectively control cash disbursements
8. What is the major purpose of an imprest
cash fund?
A. To effectively plan cash inflows and outflows
B. To ease the payment of cash to vendors
C. To determine the honesty of the petty cashier
D. To effectively control cash disbursements
9. A cash equivalent is a short-term highly
liquid investment that is readily convertible
into known amount of cash and
A. Is acceptable 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
interest rate at the date of liquidation.
D. Is so near maturity that it represents insignificant risk of
change in interest rate.
9. A cash equivalent is a short-term highly
liquid investment that is readily convertible
into known amount of cash and
A. Is acceptable 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
interest rate at the date of liquidation.
D. Is so near maturity that it represents insignificant risk of
change in interest rate.
10. Which of the following is NOT
considered cash and cash equivalents?
A. A three-year treasury note maturing on January 31 of the
next year purchased by the entity on December 1 of the
current year
B. A three-year treasury note maturing on January 31 of the
next year purchased by the entity on October 1 of the
current year
C. A 90-day T-bill
D. A 60-day money market placement
10. Which of the following is NOT
considered cash and cash equivalents?
A. A three-year treasury note maturing on January 31 of the
next year purchased by the entity on December 1 of the
current year
B. A three-year treasury note maturing on January 31 of the
next year purchased by the entity on October 1 of the
current year
C. A 90-day T-bill
D. A 60-day money market placement
CASH FLOW STATEMENT
Thomas Mariano
1. The primary purpose of a statement of
cash flows is to provide relevant
information about
A. Differences between net income and associated cash
receipts and disbursements.
B. An entity’s ability to generate positive net cash flows.
C. The cash receipts and cash disbursements of an entity
during a period.
D. An entity’s ability to meet cash operating needs.
1. The primary purpose of a statement of
cash flows is to provide relevant
information about
A. Differences between net income and associated cash
receipts and disbursements.
B. An entity’s ability to generate positive net cash flows.
C. The cash receipts and cash disbursements of an entity
during a period.
D. An entity’s ability to meet cash operating needs.
2. Cash flows arising from trading
securities
A. Are classified as operating activities.
B. Are classified as investing activities.
C. Are classified as financing activities.
D. Are not reported in the cash flow statement.
2. Cash flows arising from trading
securities
A. Are classified as operating activities.
B. Are classified as investing activities.
C. Are classified as financing activities.
D. Are not reported in the cash flow statement.
3. Cash receipts from issuing shares are
A. Cash inflows from investing activities.
B. Cash outflows for investing activities.
C. Cash inflows from financing activities.
D. Cash outflows for financing activities.
3. Cash receipts from issuing shares are
A. Cash inflows from investing activities.
B. Cash outflows for investing activities.
C. Cash inflows from financing activities.
D. Cash outflows for financing activities.
4. Cash payments to acquire equity
instruments are
A. Cash inflows from investing activities.
B. Cash outflows for investing activities.
C. Cash inflows from financing activities.
D. Cash outflows for financing activities.
4. Cash payments to acquire equity
instruments are
A. Cash inflows from investing activities.
B. Cash outflows for investing activities.
C. Cash inflows from financing activities.
D. Cash outflows for financing activities.
5. Cash advances and loans made by a
financial institution are usually classified
as
A. Operating activities
B. Investing activities
C. Financing activities
D. Component of cash and cash equivalents
5. Cash advances and loans made by a
financial institution are usually classified
as
A. Operating activities
B. Investing activities
C. Financing activities
D. Component of cash and cash equivalents
6. Under IFRS, an entity can report finance
costs in the statement of cash flows
A. In operating activities
B. Either in operating activities or financing activities
C. In financing activities
D. In investing activities or financing activities
6. Under IFRS, an entity can report finance
costs in the statement of cash flows
A. In operating activities
B. Either in operating activities or financing activities
C. In financing activities
D. In investing activities or financing activities
7. Cash receipts from royalties and
commissions are
A. Cash inflows from operating activities.
B. Cash outflows for operating activities.
C. Cash inflows from investing activities.
D. Cash outflows for financing activities.
7. Cash receipts from royalties and
commissions are
A. Cash inflows from operating activities.
B. Cash outflows for operating activities.
C. Cash inflows from investing activities.
D. Cash outflows for financing activities.
8. How should a loss on sale of machinery
be presented in a statement of cash flows
using direct method?
A. A deduction from net income
B. An addition to net income
C. An inflow and outflow of cash
D. An outflow of cash
8. How should a loss on sale of machinery
be presented in a statement of cash flows
using direct method?
A. A deduction from net income
B. An addition to net income
C. An inflow and outflow of cash
D. An outflow of cash
8. In a statement of cash flows using
indirect method, an increase in prepaid
expenses is presented as
A. A deduction from net income.
B. An addition to net income.
C. An inflow and outflow of cash.
D. An outflow of cash.
8. In a statement of cash flows using
indirect method, an increase in prepaid
expenses is presented as
A. A deduction from net income.
B. An addition to net income.
C. An inflow and outflow of cash.
D. An outflow of cash.
9. In statement of cash flows, depreciation
is treated as an adjustment to reported net
earnings because depreciation
A. Is a direct source of cash.
B. Reduces reported earnings but does nit involve an outflow of
cash.
C. Reduces reported earnings and involves an inflow of cash.
D. Is an inflow of cash to a reserve account for replacement of
assets.
9. In statement of cash flows, depreciation
is treated as an adjustment to reported net
earnings because depreciation
A. Is a direct source of cash.
B. Reduces reported earnings but does nit involve an outflow of
cash.
C. Reduces reported earnings and involves an inflow of cash.
D. Is an inflow of cash to a reserve account for replacement of
assets.
10. The preparation of the statement of cash
flows using the indirect method involves
all the following, EXCEPT determining
A. Cash provided by operations
B. Cash flows in investing and financing activities
C. Change in cash and cash equivalents during the period
D. Cash collections from customers during the period
10. The preparation of the statement of cash
flows using the indirect method involves
all the following, EXCEPT determining
A. Cash provided by operations
B. Cash flows in investing and financing activities
C. Change in cash and cash equivalents during the period
D. Cash collections from customers during the period