Multiple Choice Questions
56.Financial assets include all of the following
except:
A. Cash.
B. Marketable securities.
C. Inventories.
D. Accounts receivable.
57.Each of these categories of assets is normally shown in the balance sheet at current value,
except:
A. Inventories.
B. Accounts receivable.
C. Short-term investments in marketable securities.
D. Cash.
58.Financial assets:
A. Consist of cash and cash equivalents.
B. Are reported at cost in the balance sheet.
C. Include short-term investments in marketable securities and receivables, as well as cash.
D. Are not very productive assets and should be kept to a minimum in a well-managed company.
59.Which of the following is
not
considered a cash equivalent?
A. U.S. Treasury bills.
B. Money market funds.
C. Accounts receivable.
D. High-grade commercial paper.
60.The term cash equivalent refers to:
A. An item such as a money order, travelers' check, or check from a customer.
B. An account receivable from a reliable customer who has always paid bills within the discount period.
C. A guaranteed line of credit at the company's bank.
D. Very liquid short-term investments such as U.S. Treasury Bills and commercial paper.
61.When short-term investments appear in the balance sheet at their current market values, it is an exception to the ______ principle.
A. Revenue recognition
B. Matching
C. Cost
D. Relevance
62.The unused portion of a line of credit:
A. Is reported as a current liability in the balance sheet.
B. Decreases a company's liquidity.
C. Can be used at any time by drawing a check on a special bank account.
D. Requires a compensating balance in order to keep the line of credit open.
63.With a line of credit, a liability arises:
A. As soon as the line is created.
B. As soon as any money is borrowed.
C. Upon repayment of the debt.
D. At the maturity date.
64.In handling of daily cash transactions, a few minor errors inevitably will occur. Which of the following is used to adjust the accounting records for these small errors?
A. The bank reconciliation.
B. The Petty Cash account.
C. The Cash Over and Short account.
D. The cash budget.
65.Which of the following is
not
an example of internal control over cash?
A. Preparation of a cash budget.
B. Daily deposits of cash receipts at the bank.
C. Combining the functions of signing checks with the approval of expenditures.
D. Preparation of bank reconciliation.