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Which of the following should be reported as cash and cash equivalents and why?

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Chapter 7:   Funds Analysis, Cash Flow Analysis, and Financial Planning

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1.According to the accounting profession, which of the following would be considered a cash-flow item from an "investing" activity?cash inflow from interest income.
cash inflow from dividend income.
cash outflow to acquire fixed assets.
all of the above.
2.According to the Financial Accounting Standards Board (FASB), which of the following is a cash flow from a "financing" activity?cash outflow to the government for taxes.
cash outflow to shareholders as dividends.
cash outflow to lenders as interest.
cash outflow to purchase bonds issued by another company.
3.If the following are balance sheet changes:
         $5,005 decrease in accounts receivable
         $7,000 decrease in cash
        $12,012 decrease in notes payable
        $10,001 increase in accounts payable
a "use" of funds would be the:$7,000 decrease in cash.
$5,005 decrease in accounts receivable.
$10,001 increase in accounts payable.
$12,012 decrease in notes payable.
4.On an accounting statement of cash flows an "increase(decrease) in cash and cash equivalents" appears asa cash flow from operating activities.
a cash flow from investing activities.
a cash flow from financing activities.
none of the above.
5.Uses of funds include a (an):decrease in cash.
increase in any liability.
increase in fixed assets.
tax refund.
6.Which of the following would be included in a cash budget?depreciation charges.
dividends.
goodwill.
patent amortization.
7.An examination of the sources and uses of funds statement is part of:a forecasting technique.
a funds flow analysis.
a ratio analysis.
calculations for preparing the balance sheet.
8.Which of the following is NOT a cash outflow for the firm?depreciation.
dividends.
interest payments.
taxes.
9.Which of the following would be considered a use of funds?a decrease in accounts receivable.
a decrease in cash.
an increase in account payable.
an increase in cash.
10.The cash flow statement in the United States is most likely to appear usinga "supplementary method."
a "direct method."
an "indirect method."
a "flow of funds method."
11.For a profitable firm, total sources of funds will always          total uses of funds.be equal to
be greater than
be less than
have no consistent relationship to

Which of the following should be reported as cash and cash equivalents and why?
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Which of the following should be reported as cash and cash equivalents and why?
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Which of the following should be reported as cash and cash equivalents and why?
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Which of the following should be reported as cash and cash equivalents and why?

Examples of cash equivalents include, but are not limited to:

  • Treasury bills
  • Treasury notes
  • Commercial paper
  • Certificates of deposit
  • Money market funds
  • Cash management pools

Not all qualifying short-term, highly liquid investments are treated as cash equivalents. An agency discloses its policy for determining which items are treated as cash equivalents.

When cash equivalents are purchased and sold as part of the agency's cash management process, the associated cash flows are not reported as inflows and outflows on the statement of cash flows. To do so, would inflate both cash receipts and disbursements.

Investments with original maturities of three months or less

Generally, only investments with original maturities of three months or less meet this definition.

An example of an investment with original maturities of three months or less is illustrated below:

Both a three-month U.S Treasury bill (purchased 1/15/CY and matures 4/15/CY) and a three-year Treasury Note purchased three months from maturity qualify as cash equivalents.

However, a Treasury note purchased three years ago does not become a cash equivalent when it has three or less months to maturity.

Next: The Direct Method

Which of the following should be reported as cash and cash equivalents?

Cash equivalents include U.S. government Treasury bills, bank certificates of deposit, bankers' acceptances, corporate commercial paper, and other money market instruments. All of these financial instruments often have a short maturity, highly liquid market, and low risk.

Which of the following should not be reported as cash and cash equivalents on the balance sheet?

Restricted cash is not reported under cash and cash equivalents on a company's balance sheet, but instead, it is indicated in the financial statement's notes. The items found under cash equivalent include; banker's acceptance, commercial paper, and treasury bills.

Which of the following is included in cash and cash equivalents quizlet?

Includes money market funds, treasury bills, and commercial paper. To be classified as cash equivalents, these investments must have a maturity date no longer than three months from the date of purchase.

Which of the following items would be included in cash and cash equivalents on the balance sheet?

Examples of cash equivalents are as follows:.
Commercial paper..
Marketable securities..
Money market funds..
Short-term government bonds..
Treasury bills..

reported cash cash equivalents Cash equivalents Cash equivalents examples

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