1. Which of the following is not included in the cash and cash equivalents on the balance sheet?
A. Cash in the bank
B. Cash in the cash registers
C. Cash set aside to pay off long term debt
D. Money market funds
2. Which of the following would be an example of restricted cash?
A. Guaranteed Investment Certificates
B. Cash held in trust for clients
C. Petty cash
D. Cash deposits received from customers
3. What is a Letter of Credit?
A. A guarantee from the bank that the supplier will be paid
B. A letter recommending the credit risk of the seller
C. A recommendation to do business with the seller
D. A credit to the supplier for goods that were returned
4. All of the following items would qualify as a cash equivalent except:
A. guaranteed investment certificate.
B. treasury bills.
C. commercial paper.
D. short-term investments with maturity dates less than one year but more than three months.
5. Which of the following is normally used by Canadian companies as a unit of measure for financial reporting?
A. Discounted value of the Canadian dollar
B. Nominal value
C. Current value adjusted for inflation
D. Value when converted to the U.S. dollar
6. It is a good idea to invest idle cash because:
A. deflation will make the value of money go down.
B. it will help keep inventory levels low.
C. inflation will make the value of money go down.
D. it will assist in the payment of liabilities.
7. Wally has been saving every penny to buy himself a fishing boat when he turns eighteen. First, he selected the model boat he wanted, and then, over the past five years, has managed to save $10,000, price of the boat, from working at summer and after-school jobs. When Wally arrives at the boat dealership on his eighteenth birthday, he is disappointed to learn that the same boat now costs $11,200. The most likely reason for the price increase is:
A. he cost of boat building materials has gone down
B. Increase in purchase power of cash
C. deflation
D. a combination of cost increases and inflation
8. What is the process that management implements to ensure the safety of assets, the reliability of its financial reporting and compliance with relevant laws called?
A. Internal control
B. Cash management
C. GAAP
D. Internal auditing
9. Which of the following would be an effective internal control procedure over cash?
A. Having only one person responsible for writing and signing all cheques.
B. Having the person who receives mailed-in cheques be different than the record keeper.
C. Having many people handle the cash activities in a store and all work out of the same cash register drawer.
D. Having one person responsible for all cash handling activities and the inventory.
10. Who is responsible for ensuring the reliability and completeness of the financial statements?
A. Auditors
B. Bookkeepers
C. Internal auditors
D. Management