Cash and Cash Equivalents (Prelim)

Question 1

It is the standard medium of exchange in business and it measured at face value and must be unrestricted

Answer 1

Cash

Question 2

This is a short term highly liquid investments that are readily convertible into cash with a term of three months or less

Answer 2

Cash equivalents

Question 3

It is a checking account in which the amounts of checks drawn or presented exceeded the amount of deposit

Answer 3

Bank overdraft

Question 4

These are checks that are drawn and recorded but not delivered to payees before the end of reporting period

Answer 4

Undelivered or unreleased checks

Question 5

It is the minimum account balance that the company agrees to maintain as a support or collateral for a loan of a depositor

Answer 5

Compensating balance

Question 6

This is a cash control system which is characterized by daily deposit of all cash receipt to the bank and making disbursement through issuance of check

Answer 6

Imprest system

Question 7

Under this cash control system, the company conducts regular reconciliation of bank balance

Answer 7

Period reconciliation

Question 8

It is a nominal account that is debited for shortages and credited for overages in the petty cash fund

Answer 8

Cash short and over

Question 9

Under this imprest system, cash receipts and cash disbursements are to be made using checks

Answer 9

Petty cash fund

Question 10

Under this cash control system, all disbursements must be supported by properly approved vouchers which must be recorded in the voucher register

Answer 10

Voucher system

Question 11

This refers to planning, controlling, and accounting for cash transaction and cash balances

Answer 11

Cash management

Question 12

This type of bank deposit includes current account, checking account, or commercial deposits

Answer 12

Demand deposit

Question 13

This type of bank deposit, the depositor is given a passbook upon the initial deposit

Answer 13

Saving deposit

Question 14

This type of bank deposit is evidenced by a formal agreement embodied in an instrument called certificate or deposit

Answer 14

Time deposit

Question 15

It is a statement which brings into agreement the cash balance per book and bank and usually prepared on a monthly basis

Answer 15

Bank reconciliation

Question 16

These are book reconciling items not credited by the bank to the account of the depositor but not yet recorded by the depositor as cash receipts

Answer 16

Credit memos

Question 17

It will appear on the bank statement when a bank gives a company interest on its account balances

Answer 17

Interest earned

Question 18

It increase the company’s checking account for the amount it collected

Answer 18

Notes receivable

Question 19

These are book reconciling items debited by the bank to the account of the depositor but not yet recorded by the depositor as cash disbursements

Answer 19

Debit memos

Question 20

These are collections already recorded by the depositor as cash receipts but not yet reflected on the bank statements

Answer 20

Deposit in Transit

Question 21

These checks are already recorded by the depositor as cash disbursements but not yet reflected on the bank statement

Answer 21

Outstanding Checks

Question 22

It is essentially a roll forward of each line item in a bank reconciliation from one accounting period to the next

Answer 22

Proof of cash