Chapter 7 Cash and Receivables Test

Chapter 7 Cash and Receivables Test - True/FalseQuestions 1...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 7 Cash and Receivables    True / False Questions   1. Cash equivalents would include investments in marketable equity securities as long as management intends to sell the securities in the next three months. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 07-01 Define what is meant by internal control and describe some key elements of an internal control system for cash receipts and disbursements. Topic: Internal Control 2. From a financial accounting perspective, the main purposes of a system of internal control are to improve the accuracy and reliability of accounting information and to safeguard assets. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 07-01 Define what is meant by internal control and describe some key elements of an internal control system for cash receipts and disbursements. Topic: Internal Control 3. In a good system of internal control, the person who initiates a transaction should be allowed to effectively control the processing of the transaction through its final inclusion in the accounting records. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 07-01 Define what is meant by internal control and describe some key elements of an internal control system for cash receipts and disbursements. Topic: Internal Control 4. Depending on the circumstances, the classification of a compensating balance may be either current or noncurrent, and the arrangement should be disclosed in the notes. TRUE AACSB: Reflective Thinking AICPA FN: Reporting Blooms: Remember Difficulty: 1 Easy Learning Objective: 07-02 Explain the possible restrictions on cash and their implications for classification in the balance sheet. Topic: Restricted Cash and Compensating Balances 5. Under IFRS, an overdraft in a cash account at one bank can be offset against a positive balance in the
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
account at another bank for purposes of reporting cash on the company’s balance sheet. TRUE AACSB: Reflective Thinking AICPA BB: Global Blooms: Remember Difficulty: 1 Easy Learning Objective: 07-02 Explain the possible restrictions on cash and their implications for classification in the balance sheet. Learning Objective: 07-10 Discuss the primary differences between U.S. GAAP and IFRS with respect to cash and receivables. Topic: International Financial Reporting Standards Topic: Restricted Cash and Compensating Balances 6. The net method of accounting for cash discounts requires adjusting entries for discounts taken. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 07-03 Distinguish between the gross and net methods of accounting for cash discounts.
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern