61 when short term investments appear in the balance sheet at their current market v 4295404
61.When short-term investments appear in the balance sheet at their current market values, it is an exception to the ______ principle.
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.
66.The purpose of establishing a petty cash fund is to:
A.Achieve internal control over small cash disbursements not made by check.
B.Keep track of expenditures paid out of cash receipts from customers prior to deposit.
C.Ensure that the amount of cash in the bank does not become excessive.
D.Keep enough cash on hand in the office to cover all normal operating expenses of the business for a period of time.
67.A good system of internal control will include all of the following except:
A.Preparing a pro-forma financial statement on a monthly basis.
B.Separating the handling of cash from the maintenance of accounting records.
C.Making all major payments by check.
D.Reconciling bank statements with accounting records.
68.Which of the following does not contribute toward achieving internal control over cash?
A.The practice of making small cash disbursements directly from the current day's cash receipts.
B.The preparation of cash budgets.
C.The use of a petty cash fund.
D.The practice of approving every expenditure before the cash disbursement is made.
69.Which of the following practices best illustrates efficient management of cash?
A.The accountant records all cash receipts and payments when reconciling the bank account at the end of each month.
B.Management arranges for a loan to cover projected cash shortages during the production phase of the business cycle each year.
C.Cash budgets (forecasts) are prepared only one month in advance in order to avoid the need for constant revision.
D.All cash resources are held in the checking account to maximize liquidity.
70.Efficient management of cash includes which of the following concepts?
A.Pay each bill as soon as the invoice is received.
B.Deposit all cash receipts and make all cash disbursements at the end of each week.
C.Prepare a control listing of cash receipts at the time and place the money is received.
D.Pay suppliers in cash out of cash sales receipts before depositing them in the bank.