Acc 231 Chapter 7 Question and answers 100% correct
2025/2026
Cash Equivalents Short-term, highly liquid invest- ments that are both
a) readily convertible to
cash, and
b) so near their maturity
that they present
insignificant risk of changes
in value.
Examples: Treasury bills,
Com- mercial paper, and
Money mar- ket funds,
Certificates of Deposit (CD'S)
2. Restricted Cash Companies segregate
restricted cash from
"regular" cash. Cash that is
restricted for less than one year
or operating cycle reclassified
as "Other Current Assets."
Cash that is restricted for more
than one year or operating
cycle reclassified as "Other
Long-term assets."
Examples, restricted for:
(1) plant expansion, (2)
retirement of long-term debt,
and (3) com- pensating
balances.
3. Bank Overdrafts Company writes a check for
more than the amount in its
1/
31
, cash ac- count.
uGenerally reported as a current
liability.
2/
31
, Acc 231 Chapter 7
uOttset against other cash
ac- counts only when
accounts are with the
same bank.
4. Money Market funds are investment
accounts where you agree to... NOT withdrawl the cash
during a period of time in
exchange for a higher
interest rate
5. Classification of Cash, Cash Equivalents and Non- Classification: Cash
cash Items: Comment: If unrestricted, report
as cash. If restricted, identify
Item: Cash and classify as current and
Classification noncurrent assets.
: Comment:
6. Classification of Cash, Cash Equivalents and Non- Classification: Cash
cash Items: Comment: Report as cash
Item: Petty cash and change
funds Classification:
Comment:
7. Classification of Cash, Cash Equivalents and Non- Classification: Cash
equivalents
cash Items: Comment: Investments with matu-
rity of less than 3 months,
Item: Short-term paper (Less than 3 months often combined with cash
ma- turity)
Classification:
Comment:
8. Classification of Cash, Cash Equivalents and Non- Classification:
3/
31
, Temporary Invest-
cash Items: ments
Item: Short-term paper (3-12 months
maturity)
4/
31
2025/2026
Cash Equivalents Short-term, highly liquid invest- ments that are both
a) readily convertible to
cash, and
b) so near their maturity
that they present
insignificant risk of changes
in value.
Examples: Treasury bills,
Com- mercial paper, and
Money mar- ket funds,
Certificates of Deposit (CD'S)
2. Restricted Cash Companies segregate
restricted cash from
"regular" cash. Cash that is
restricted for less than one year
or operating cycle reclassified
as "Other Current Assets."
Cash that is restricted for more
than one year or operating
cycle reclassified as "Other
Long-term assets."
Examples, restricted for:
(1) plant expansion, (2)
retirement of long-term debt,
and (3) com- pensating
balances.
3. Bank Overdrafts Company writes a check for
more than the amount in its
1/
31
, cash ac- count.
uGenerally reported as a current
liability.
2/
31
, Acc 231 Chapter 7
uOttset against other cash
ac- counts only when
accounts are with the
same bank.
4. Money Market funds are investment
accounts where you agree to... NOT withdrawl the cash
during a period of time in
exchange for a higher
interest rate
5. Classification of Cash, Cash Equivalents and Non- Classification: Cash
cash Items: Comment: If unrestricted, report
as cash. If restricted, identify
Item: Cash and classify as current and
Classification noncurrent assets.
: Comment:
6. Classification of Cash, Cash Equivalents and Non- Classification: Cash
cash Items: Comment: Report as cash
Item: Petty cash and change
funds Classification:
Comment:
7. Classification of Cash, Cash Equivalents and Non- Classification: Cash
equivalents
cash Items: Comment: Investments with matu-
rity of less than 3 months,
Item: Short-term paper (Less than 3 months often combined with cash
ma- turity)
Classification:
Comment:
8. Classification of Cash, Cash Equivalents and Non- Classification:
3/
31
, Temporary Invest-
cash Items: ments
Item: Short-term paper (3-12 months
maturity)
4/
31
