CASH AND CASH EQUIVALENT THEORY

The amounted reported as "Cash" on a company's balance sheet normally should exclude

a. postdated check that are payable to the company.

b. cash in a payroll account.

c. undelivered checks written and signed by the company.

d. petty cash

A

What criterion is excluded in the definition of cash equivalents under PFRS?

a. Short-term

b. Highly liquid investments

c. Investment in high-quality instruments

d. Readily convertible to known amounts of cash

A

All of the following can be classified as cash and cash equivalents, except

a. Bank drafts

b. Equity investments

c. Loan notes held due for repayment in 90 days

d. Treasury notes acquired and due in 60 days

B

What is a compensating balance?

a. Savings account balances

b. Margin account held with brokers

c. Temporary investment serving as collateral for outstanding loan

d. Minimum deposit required to be maintained in connection with a borrowing arrangement

D

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 short-term loan is classified separately as current asset

d. Which is not legally restricted as to withdrawal is classified separately as current asset

B