PLEASE ANSWER THE FOLLOWING QUESTIONS: TRUE OR FALSE

TOPIC: CASH AND CASH EQUIVALENTS, BANL RECON. RECEIVABLES

1. A basic requirement for cash and cash equivalent is it must be unrestricted in use for current operations*

2. Petty cash fund, money orders, coin and currency, checking account are considered cash for financial reporting purposes but not IOUs, certificate of deposit, money market saving certificate, and postdated check.*

3. Cash is measured at face value*

4. Cash in foreign currency is measured at the current exchange rate*

5. Bank overdraft generally should be reported as current liability.*

6. Compensating balance that is legally restricted and related to short-term loan is classified separately as current asset.*

7. Change fund, certified check, personal check, and postdated check are considered cash.*

8. The internal control feature specific to petty cash is imprest system.*

9. The major purpose of an imprest petty cash fund is to effectively control cash disbursement.*

10.The petty cash fund account under the imprest fund sytem is debited when the fund is created and when the size of the fund is decreased.*

11.Note receivable collected by the bank in favor of the depositor and credited to the account of the depositor is added to the cash balance per ledger in preparing a bank reconciliation which ends with adjusted cash balance.*

12.In preparing a monthly bank reconciliation Deposit in transit is added, while outstanding check is deducted from the balance per bank statement to arrive at the correct cash balance.*

13.Nontrade receivables are classified as current assets only if these are reasonably expected to be realized in cash within one year, the length of the operating cycle notwithstanding.*

14.Credit balances in accounts receivables shall be classified as current liabilities.*

15.When the direct write-off method of recognizing bad debt expense is used, the entry to write off a specific customer account would decrease accounts receivable and decrease net income.*

16.When the allowance method of recognizing bad debt expense is used, the entry to write off a specific customer account would decrease accounts receivable and decrease net income.*