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ACCCOB2: CASH AND CASH CONTROLS EXAM QUESTIONS WITH ANSWERS
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ACCCOB2: CASH AND CASH CONTROLSEXAM QUESTIONS WITH ANSWERS
It comprises cash on hand and demand deposits?
Cash
EXAMPLES of cash in hand?
currency, coins and bills
Brer
Rer
does PAS7 define demand deposits? why ?
nope because In practice, these are generally considered to be deposits with
financial institutions that are repayable on demand within one working day and
without penalty.
Components of Cash?
1. Cash on hand
2. Cash in bank
3. Cash fund
Cash on hand?
Undeposited collections of currency and checks
examples of checks under cash on hand?
bills and coins, customer's checks, manager's checks, traveler's checks, bank
drafts and money order.
Cash in bank?
Demand deposits such as savings account and checking account.
in checking accounts does it in involve checks in current account?
yes
Cash fund?
Fund set aside for current operation
examples of cash fund?
petty cash fund, payroll fund, dividend fund, interest fund, tax fund, revolving
fund
and change fund.
revolving fund?
fund or account that remains available to finance an organization's continuing
operations without any fiscal year limitation because the organization
replenishes the fund by repaying money used from the account.
Change fund:?
, set amount of money used by a department to make change for customers who
are purchasing goods or services.
petty cash fund?
a cash fund used to pay relatively small amounts
current operation?
within the operating cycle --> which means its short term
Cash Equivalents, PAS 7 defined, are...?
short-term, highly liquid investments that are readily convertible to known
amounts of cash and that are subject to an insignificant risk of changes in value.
PAS 7 does not define 'short-term' but states that..?
an investment normally qualifies as a cash equivalent only when it has a short
maturity of, say, three- months or less from the date of acquisition’.
Examples of cash equivalents:? and who normally uses them?
qTreasury bill --> govt
qShort-term time deposit --> banks
qMoney market --> corps.
qCommercial paper--> corp.
On acquisition date, maturity of the preceding instruments must be 3 months or
less. true or false?
true
•Investment in securities of P 1,000,000. These securities are Treasury bills. The
T-Bills have 10-year term and purchased on Dec 31 at which time they had two
months to go until they mature.
is this an example of cash equivalent? why?
yes because it matures in two months
•Time deposit, purchased December 15, 2019 and due on August 15, 2020.
is this an example of cash equivalent?
no because it goes beyond 3 months
•Investment in securities of P 1,500,000. These securities are commercial
papers. The term of the papers is nine months and they were purchased on Dec
31 at which time they had three months to go until they mature.
is this an example of cash equivalent?
yes because it matures in 3 months
what are the special considerations of cash and cash equivalents?
1. Foreign currency
2. Cash in bank experiencing financial difficulty or bankruptcy
3. Cash fund for noncurrent purpose
4. Bank Overdraft
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