CHAPTER 14

CASH AI,{D CASH EQUIVALENTS

QUESTION r.4-1

What is eash?

AI{SWER 14-1

From the point of view of a layman, "cash-' simply means money.

Money is the standard medium of exchange in businesstransactions which refers to the curuency and coins which arein circulation and legal tender.

However, in the accounting parlance, the term "cash-' has aspecialand broader meaning. It connotes more than money. Ascontemplated in accounting, cash includes "money and anyother negotiable instrument that is payable in money andacceptable by the bank for deposit and immediate credit".

Accordingly, cash includes checks, banh drafts and monEl ord,ersbecause these are acceptable by the bank for deposit orimmediate encashment.

QUESTION 14-2

Ih"t is the meaning of "unrestricted cash"?

ANS\MER 14-2

There is no speci{ic standard dealing with "cash-'.

The only guidance is found in PAS 1, paragraph 66, whichprovides that "an entity shall classify an asset as current whenit is cash or a cash equivalent unless it is restricted from beingexchanged or used to settle a liability for at least twelve monthsafter the end of reporting period."

Accordingly, to Le reported. as "caslf'as a current asset, an itemmust be unrestricted in use. This means that the cash must bereadily available in the payment of current obligations and notbe subject to any restrictions, contractual or otherwise. Thus,unrestricted cash irtcludes cash on hand, cash in bank and cashfund set aside for current purposes.

4U

QUESTION r.4-3

What is the meaning of "cash equivalents"?

ANSWER 14-3

PAS 7, paragraph 6, defines cash equiualents as short-term andhighly liquid investments that are readily convertible into cashand so near their maturity that they present insignificant riskof changes in value because of changes in interest rates.

PAS ? further states that "only highly tiquid investments thatare acquired three months before maturity can qualifr ascash equivalents".

Examples of cash equivalents are:

a. Three-month BSP treasury billb. Three-year BSP treasury bill purchased three months before

date of maturityc. Three-month time depositd. Three-month money market instrument

Equity securities cannot qualiS as cash equivalents becauseshares do not have a maturity date.

However, preference shareswith specified redemption date andacquired three months before redemption date can qualify ascash equivalents.

QUESTION 14-4

Explain the valuation of cash in the statement of financialposition.

ANS\AIER 14.4

Cash is valued at face ualue. Cash in foreign currenqtis valuedat the cunent erchange rate.

If a bank or financial institution holding the funds of the entityis in bankruptcy or financial difficulty, cash should be writtendown to estirnated realizable ualue if the amount recoverableis estimated to be lower than the face value.

4t5

QUESTION 14-5

Explain the fi.nancial statement presentation and classificationofcash and cash equivalents.

ANS\MER 14-5

The caption "cash and cash equivalents" should be shown ast-he first itern among the current assets.

This caption includ.es all cash items, such as cash on hand, cashin bank, petty cash fund and cash equivalents which areunrestricted in use for current operations

However, the details comprising the "cash and cash equivalents"should be fisclosed in the notes to frnancial statements.

QUESTTON 14-6

Explain the classification of investments in time deposit, moneymarket instrument, and treasury bills.

ANSI{TER 14-6

Investments in time deposit, money market instruments andtreasury bills should be classified as follows:

a. If the term is three nronths or less, such instruments areclassified as cash equiualents and therefore included in the

' caption "cash and cash equivalents".

b. If the term is more than three months but within olrp yea,r,

such investments are classified as short-term or temporaryinvestments and presented separately as current assets.

c. If the term is more than one year, such investments areclassified as long-ternt inuestntents.

However, if such investments become due within one year ftomthe end of the reporting period, they are reclassified astemporary investments.

QUESTTON 14-7

Explain the treatment of foreign currency.

ANSWER 14-7

Cash in foreign currency shall be translated to Philippine pesosusing the cunent exchange rate. ,

Deposits in foreign countries which are not subject to any foreignexchange restriction are included in "cash".

Deposits in foreign bank which are subject to foreign exchangerestriction, if material, shall be classified separately amongnoncurrent assets and the restriction clearly indicated.

QUESTTON 14-8

Explain the classification of a cash fund set aside for a certainpurpose.

ANS\MER 14-8

If the cash fund is set aside for use in cunent operatinns. it is acurrent asset. It is included as part ofcash and cash equivalents.

Examples of such fund are petty cash fund, payroll fund, travelfund, interest fund, dividend fund and tax fund.

On the other hand., if the cash fund is set aside /or norrcurrentpurposes, it is shown as long-term'investment.

Examples of such fund are sinking fund, preferred redemptionfund, contingent fund, insurance fund and fund for acquisitionor construction of property, plant and equipment.

Classification of a cash fund as current or noncurrent shouldparallel the classification of the related liability.

437

QUESTTON 14-9

Explain the treatment of a bank overdraft.

ANSWER 14-9

When the cash in bank account has a credit balance, it is said tobe an overdraft.

The credit balance in the cash in bank account results from theissuance of checks in excess of the deposits.

A bank overdraft is classified as a current liability and should.not be offset against other bank accounts with debit balances.

However, when the entity maintains two or more accounts inone bank and one account results in an overdraft, such overdraftmay be offset a$ainst the other bank account with a debitbalance.

Moreover, an overdraft may also be offset against the otherbank account if the arnount is not rnaterial.

QUESTTON 14-ro

What is a compensating balance? Explain the classification inthe statement of financial position.

ANSWER 14.10

A compensating balnrrce is the minimum checking or demanddeposit account balance that must be maintained in connectionwith a borrowing arrangement with a bank.

For example, an entrty borrows P2,000,000 from a bank andagrees to maintain IOo/o compensating balance or P200,000 in acurrent or checking account.

In effect, this arrangement results in the reduction of theamount borrowed because the compensating balance providesa source of funds to the bank as partial compensation for theIoan extended.

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438

QUESTION 14-11 ,

Explain fi.rlly the treatment of compensating balance.

ANS\AIER 14.11

If the deposit is not tegatty restricted, as to withdrawal by theborrower because of an informal compensating balanceagreembnt, the compensating balance is part of cash.

If the deposit is legally restricted because of a formalcompensating balance agreement, the compensating balance isclassified separately as "cash held as compensating balance"irnder cunent assets if the related loan is short-term.

If the related loan is long-term, the compensating balance isclassified as noncurrent investment.

In many instances and in accordance with'normal bankingpractices, deposits are not legally restricted because most oftencompensating balance agreements are informal and thereforenot legally binding.

The amount and. nature of such agreements whether legally ornot legally restricted shall be fully disclosed in the notes tofinancial statements.

QUESTION 14-12

What is the meaning of und,elivered check? Postdated check?Stale check?

ANS\AMR T4-T2

An undelivered or unreleased check is one that is merelydrawn and reoorded but not given to the payee before the end ofreporting period.

The unreleased check shall not be tneated as outstanding check.Acmrdingly, the original enbry for the payment shall be reversedso as to restore the cash balanoe and the related liability aeount.

A postdated check delivered is a check drawn, recorded. andalready given to the payee but it bears a date subsequent to theend of reporting period.

The original entr5' recording a delivered postdated check shallalso be reversed and therefote restored, to the cash bal,ance.

rB9

A stale check is a check not encashed by the payee within arelatively iong period of time.

In banking practice, a check becomes stale if not encashedwithin six m,onths from the time of issuance.

' Of course, this is a matter of entity policy. Thus, even afterthree months, the entity may issue a "stop payment order" tothe bank for the cancelation of the stale check.

The stale check previously issued by an entity shall also berestored to the cash balance.

QUESTION 14-13

Explain window dressing, lapping and kiting.

AI{SWER 14-13

windnw dressing is a practice of opening the books of accountsbeyond the close of the accounting period for the purpose ofshowing a better financial position and performance.

dressing is usually perpetrated as follows:

a. By recording as of the last day of the accounting period' collections made subsequent to the close of ttre peiioa.

b. By recording as of the last day of the accounting periodpayments of accounts made subsequent to the cloJe-of theperiod.

Lapping consists of misappropriating a collection from onecustomer and concealing this defalcation when collection ismade from another customer.

Kitingisa transfer of cash from one bank to another bank. Kitingis usually employed at the end of the month.

Kiting occurs when a check is drawn against a first bank anddepositing the sarne check in a second bank to cover theshortage in the'latter bank.

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QUESTION 14-14

' Explain the imprest system.

ANSWER I4-I4The imprest systemis an internal control device for cash whichrequires that all cash receipts should be deposited intort and, allcash payments should be made by means of checle. Smalldisbursements are paid out of the petff cash fund.

QUESTION 14-15

What are the two systems of handling petty cash fund? Explainbriefly.

ANS\JITER L4-I5

1. Imprest fund, system -Prctty cash expenses are record.ed.upon replenishment. The amount of the replenishmentis normally equal to the petty cash disbursements.

2. Fluctuating fund, systent - Petty cash expenses areimrnediately recorded. The amount of replenishment maybe equal to, more or less than, the petty cash disbursements.

QUESTION 14-16

What is a bank reconciliation?

ANSWER 14-16

A banh reconnilintinn, is a statement which brings into agreementthe cash balance per book and cash balance per bank. It is usuallyprepared monthly because the bank provides the depositor withthe bank statement at the end of every month.

Lbanh statementis a monthly report ofthe bank to the depositorshowing the cash balance per bank at the beginning, the depositsacknowledged, the checks paid, other charges and credits andthe daily cash balance per bank during the month.

Actually, the bank statement is an exact copy of the depositor'sledger in the records of the bank.

M1

QUESTION 14-17

Srhat are credit memos and debit memos?

ANSWER L4-L7

Cred,it n.lenlos refer to items not representing deposits credited,by the bank to the account ofthe depositor but not yet recordedby the depositor as cash receipts. They have the effect ofincreasing the bank balance.

T\'pical examples of credit memos are note collected by bankin favor of the depositor and proceeds ofbank loan credited. tothe account of the depositor.

Debit rletnos refer to items not representing checks paid bybank which arc eharged or debited by the bank to the account ofthe depositor but not yet recorded by the depositor as cashdisbursements. They have the effect of decreasing the bankbalance.

Typical examples of debit memos are NSF checks and bankservicecharges.'. i

QUESTION 14-18

Explain deposits in transit.

ANSWER 14-18

Deposits in transit are collections already recorded by thedepositor as cash receipts but not yet reflected on the bankstatement

Deposits in transit include:

Collections already forwarded to the bank for deposit buttoo late to appear in the bank statement.

Undeposited collections or those still in the hands of thedepositor. In effect, these are cash on hanci awaiting deliveryto the bank for deposit.

a-

b.

QUESTION 14-19

Explain outstanding checks.

ANSWER. 14-19

Outstand,ing checksare checks already recorded by the depositoras cash disbursements but not yet reflected on the bankstatement. Outstanding checks include:

a. Checks drawn and already given to payees but not yetpresented for payment.

b. Certified checks - A certified check is one where the bankhas stamped on its face the word. "accepted' or "certified'indicating sufficiency of fund.

When the bank certifies a check, the account of the depositoris imrnediately debited or charged to insure the eventualpayment of the check.

Certified checks should. be deducted. from the totaloutstanding checks (if included therein) because they areno longer outstanding for bank reconcfiation purposes.

QUESTION 14-20

What are the three forms of bank reconciliation?

ANSWER L4-2O

Ad,justed balance method - Under this methodo the bookbalance and the bank balance are brought tq a correctcash balance that must appear on the balance sheet.

Book to banh method - Under this method, the bookbalance is reconciled with the bank balance or the bookbalance is adjusted to equal the bank balance.

Bank to booh ntethod, - Under this method, the bankbalance is reconciled with the book balance or the bankbalance is adjusted to equal the book balance.

1.

2.

3.

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QUESTTON 14-21, i!I

What is a "proof of cash"?

ANsWEtr, t4,zt ,

:

S,.proof,i of,, cash is an expand.ed:reconcilidti6ni in that ritineludes proof of receipts'dnil ilisbulperrlitdrts. '

fhi.g'hpproach' ma]l be usef4l'.,in discovering pog'slblediscrepancies in'handling pash partleutrarly whuir caphryeceipts have 'been recorded. but have not. been deposited.

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QUESTION 14-22 Multiple choice (IAA)

1. What is the basic requirem"ni fo" cash and cashequivalent?

a. Unrestricted in use for current operationsb. Available for the purchase of property, plant and.

equipmentc. Set aside for the liquidation of long-term d.ebtd. Deposited in bank

2. Which of the following shall not be consider"d "urh

fo"financial reporting purposes?

a. Petty cash fundb. Money ordersc. Coin and currencyd. IOUs

3. Which of the following is usually considered. cash?

a. Certificate of depositb. Checking accountc. Money market saving certificated. Postdated check

4. A cash equivalent is a short-term, highly liquid investmentthat is readily convertible into known amount of cash,and

a. Is acceptable as a m€ans to pay current liabfities.b. Has a current market value that is greater than the

original cost.c. Bears an interest rate that is at least equal to the prime

interest rate at the date of liquidation.d. fs so near maturity that it presents insignificant risk of

change in interest rate.

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5. Al1 of the following can be classified as ca,sh, and cashequiualents, except?

Redeemable preference shares acquired and due in60 daysCommercial papers held and due for repayment in 90daysEquity investmentsA bank overdraft

6. Which is false concerning measurement of cash and cashequivalents?

a. Cash is measured at face value.b" Cash in foreign currency is measured at the current

exchange rate.c. If a bank or financial institution holding the funds of

the entity is in bankruptcy or financial dif6,culty, cashshould be written down to estimated realizable value.

d. Cash equivalents should be measured at maturity value,meaning face value plus interest.

?. If material, deposits in foreign bank which are subject toforeign exchange restriction shall be classified

a. Separately as current asset, with appropriatedisclosure.

b. Separately as noncurrent asset with appropriatedisclosure.

c. Be written off as loss.d. As part of cash and cash equivalents.

8. Bank overdraft generally should be

a. Reported. as a ded,uction from current assets.b. Reported as a deduction from cash.c. Netted against cash and a net cash amount reported.d. Reported as a current liability

b.

c.d.

9. What is a compensating balance?

a. Saving account balanceb. Demaird deposit account balancec. Temporary investmerr*t serving as collateral for

outstanding loand. Minimum deposit required to be maintained in

connection with a borrowing arrangement

g balance10. A compensatin

a. Must be included in cash and cash equivalent.b. Which is legally restricted and related to a long-term

loan is classified as current asset.c- Which is legally restricted and related to a short-terr4

loan is classifred separately as current asset-d. Which is not legally restricted as to withdrawal is

classified separately as current asset-

ANSWER 14-22

l.a 6. d2. d 7. b3.b 8. d4. d 9. d5. c, 10. c

QUESTION 14-23 Multiple choice (IAA)

1. flhich of th.e following should not be considered n'cash"?

a. Change fundb. Certifi.ed checkc. Personal checkd. Postd.ated check

2. AII of the following may be included in "ca'sn*', except

a. Currencyb: Money market instrumentc. Checking account balanced. Saving account balahce

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3. Deposits held as compensating balance

a. Usually do not earn interest.b. If legally restricted and held against short-term credit

may be included as cash.c. If legaly restricted and held against long-term credit

may be included among cunent assets.d. None of these

4. What is the treatment of customers' postdated checks?

Accounts receivablePrepaid expensesCashAccounts payable

5. Which of the following is not considered as a cashequivalent?

a. A three-year treasury note maturing on May 30 of thecurrent year purchased by the entity on April 15 ofthe current year

b. A three-year treasury note maturing on May 30 of thecurrent year purchased by the entity on January lbof the current year

c. A 90-day T-biUd. A 60-day money market placement

-6. At the end of the current year, an entity had variouscheeks and papers in the safe. Which of the followingshould not be included in "cash" in the current year-endstatement of financial position?

a. US $20,000 cash.b. Past due promissory note issued in favor of the entity

by the President.c. Another entity's P150,000 check payable to the entity

dated December 15 of the current year.d. The entity's undelivered check payable to a supplier

dated December 31 of the current year.

a.b.c.d.

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7. Which of the following should be exeluded from cashand cash equivalents?

a. The minimum cash balance in the current accountwhich is maintained to avoid service charge.

b. A check issued by the entity on December.2T of thecurrent year but dated January 15 of next year.

c. Time deposit which matures in one year.d. A customer's check denominated in a foreign currency.

Which of the following statements is incorrect?

a. The accounting function should be separated from thecustodianship of assets.

b. Certain clerical personnel should be rotated amongvarious jobs.

c. The responsibility for receiving merchandise andpayrng for it should usually be given to one person.

d. An entity's personnel should be given well-definedresponsibilities.

At the end of the currentyear, an entity had cash accoulrtsat three different banks. One account is segregated solelyfor payment into a bond sinking fund. A second account,used for branch operations, is overdrawn. The thirdaccount, used for regular corporate operations, has apositive balance. How should these accounts be reported?

a. The segregated account should be reported as anoncurrent asset, the regular account should b-e

reported as a current asset, and the overdraft should bereported as a current liability

b. The segregated and regular accounts should be reportedas current assets, and the overdraft should be reportedas a current liability

c. The segregated account should be reported as anoncurrent asset, and the regular account should bereported as a current asset net of the overdraft

d. The segregated and regular accounts should be reportedas current assets net of the overdraft

8.

9.

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10. Under which classificationexpansion reported?

a. Current assetsb. Noncurrent assetsc. Current liabilitiesd. Equity

ANSWER L4-23

I

is cash restricted for plant

1.d2.b3.d4.a5.b

6.b7. c8.c9.a

10. b

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QUESTION 14-24 Multiple choice (IAA)

1. Petty cash fund rs

Separatbly classified as current assetMoney kept on hand for making minor disbursementsof coin and currency rather than by writing checksSet aside for the payment of payrollRestricted cash

2- The internal control feature specifi.c to petty cash is

a, Separation of dutiesb. Assignment of responsibilityc. Proper authorizationd. Imprest system

3. What is the major purpose of an imprest petty cash fund.?

a. To effectively plan cash inflows and outflowsb. To ease the payment of cash to vendorsc. To determine the honesty of the petty cashierd. To effectively control cash disbursements

a.b.

c.d.

4. The petty cash fund account under the imprest fund sybtemis debited

a. Only when the fund is created.b. When the fund is created and everytime it is replenished.c. When the fund is created and when the size of the fund

is increased.d. When the fund is credted and when the fund is

decreased

In reimbursing the petty cash fund, which of the followingis true?

a. Cash in debitedb. Petty cash is debitedc. Petty cash is creditedd. 'Expense accounts are debited

Which of the following statements in relation to petty cabhis incorrect?

a. The imprest petty cash system in effect adheres to therule of disbtusement by check.

b. Entried are made to the petty cash account only toincrease or decrease the size of the fund or to adjust thebalance if not replenished at year-end.

c. The petty cash account is debited when the fund isreplenished.

d. Tlie petty cash fund is'reported as part of current assets.

7.. When a petty cash fund is used., which of the followingstatements is true?

a. The balance of the petty cash fund should. be reportedin the statement of financial position as a long-terminvestment.

b. The petty cashier's summary of petty cash paymentsserves as a journal entry that is posted to the appropriategeneral ledger account.

c. The reimbursement of the petty cash fund should becredited to the cash account.

d. Entries that include a credit to the cash account shouldbe recorded at the time the payments from the pettycash fund are made.

5.

6.

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8.

9.

A Cash Over and Short account

a. Is not generally accepted.b. Is debited when the petty cash fund proves out over.c. Is debited when the petty cash fund proves'out short.d. Is a contra account to cash.

Which of the following statements in relation to pettycash fund is false?

Each disbursement from petty cash should be supportedby a petty cash voucher.The creatioq of a petty cash fund requires a journal entryto reflect thb transfer of fund out of the general cashaccount.At any time, the sum of the cash in the petty cash fundand the total of petty cash vouchers should equal theamount for which the imprest petty cash fund wasestablished.With the establishment of an imprest petty cash fund,one person is given the authority and responsibfity forissuing checks to cover minor disbursements.

10. Which of the following statements in relation to the cashshort or over account is true?

It would be impossible to have cash shortage oroverage if employe6s were paid in cash rather thanby check.The entry to account for daily cash sales for which asmall amount of cash shortage existed would includea debit to cash short or over account.If the cash short or over account has a debit balanceat the end of the period it must be debited to anexpense account.A credit balance in a cash short or over account shouldbe considered a liability because the short changedcustomer will demand return of this amount.

b.

c.

d.

a.

b.

c.

d.

452

ANSWER L4-2.4

l.b 6. c2. d 7. c3. d 8.:c4.c 9. d5.d 10. b

QUESTION t4-25 Multiple choice (IAA)

1. A bank reconciliation is

a. A formal financial statement that lists all of the bankaccount balances of an entity.

b. A merger of two.banks that previouslywere competitors.c. A statement s6nt by the bank to depositor on a monthly

basis.d. A schedule that accounts for the fifferences between

an entity's cash balance as shown in the bank statementand the cash balance shown in the general ledger.

2. Which of the following items must be added to the cash' balance per ledger in preparing a bank reconciliation which

' ends with adjusted cash balance?

a. Note receivable collected by bank in favor of thedepositor and predited to the account of the depositor

b. NSF customer checkc. Service charged. Erroneous bank debit

3. Iir preparing abank reconci-liation, interest paid by the bankon the account is

a. Added to the bank balanceb. Subtracted from the bank balancec. Added to the book balanced. Subtracted from the book b'alance

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4. In prepqring a monthly bank reconciliation, which of thefollowing would be added to the balance per bank statementto arrive at the correct cash balance?

a. Outstanding checksb. Bank service chargec. Deposits in tiansitd. A customer's note collected by the bank on behalf of the

depositor

5. Which of the following must be deducted from the bankstatement balance in preparing a bank reconciliation whichends with adjusted cash balance?

Deposit in transitQutstanding checkReduction of loan charged to the account of the depositorCertified, check

If the balance shown on an entity's bank statement is less

than the correct cash balance and neither the entity nor,the bank has made anJ errors, there must be

a. Deposits credited by the bank but not yet recorded bythe entity

b. Outstand,ing checksc. Deposits in transitd. Bank charges not yet recorded by the entity

If the cash balance.shown.on entity's accounting records rs

less than thd correct cash balance and neither the entitynor the bank has mad.e any errors, there must be

Deposits credited by the bank bui not yet recorded bythe entityDeposits in transitOutstanding checksBank charges not yet recorded by the entity

a.b.c.d.

i

!:

6.

7.

b.

c.d.

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8. Which of the following would not require an adjusting entryon the depositor's books?

a. NSF check from c,ustomerb- Check in payment of account payable as reeorded by

the depositor is overstatedc. Deposit of another entity is credited by the bank to the

accqunt of the depositord. Bank service charge

9. Bank reconciliations are normally prepared on a monthlybasis to identify adjustments needed in the depositor'srecords and to identify bank errors. Adjustments on thepart of the depositor should be recorded for

a. Bank errors, outstanding checks and deposits in transit.b. All items- except bank error,s, outstanding checks and

deposits in transit..c. Book errors,. bank errors, deposits in transit and

outstand.ing checks.d. Outstanding checks and deposits in,trarrsit.

10. Bank statements provide 'information about all, of thefollowing, except

Checks cleared during'the periodNSF checksBank charges for thq periodErrors made by the depositor

ANSWER L4-25

1.2.3.4.5.

a.b.c.d.

eacbd

daccb

6.t.8.9.

10.

;

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QUESTION 14-26 Multiple choice (IAA)

1. Which of the following statements is false?

a. A certified check is a Iiability of the bank certifying it.b. A certified check will be accepted by many persons who

would not otherwise accept a personal check.c. A certified check is one drawn by a bank upon itself.d. A certified check should not be included in the

outstanding checks.

2. A proof of cash

a. is a physical count of currencies on hand at the end ofreporting period.

b. Is a formal statement showing the total cash receiptsduring the year.

c. Is a four-column bank reconciliation showingreconcfiation of cash balances per book and per bank althe beginning and end of the current month andreconci-Iiation of, cash receipts and cash disbursementsof the bank and.the depositor during the current month.

d. Is a summary of cash receipts and cash payments.

3. A proof of cash would be useful for

a. Discovering cash receipts that have not been record.edin the journal

b. Discovering time lag in making depositsc. Discovering cash receipts that have been recorded but

have not been depositedd Discovering an inadequate separation of incompatible

duties of employees

4. Which of ihe following is not a characteristic of a system ofcash control?

a. Use of a voucher systemb. Coffbi\ed responsibility for hand.Iing and recordirrg cashc. Daily deposit of all cash receivedd. Internal audits at irregular intervals

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5. Which of the following statements in relation to,,bankreconciliation is, true?

Bank serviqe charge wilI cause the eash balance pgrledger to be higher than that rdported by. the bank,all other things being equal.Credit memos will cause the cash balance per ledgerto be higher than that reported by the bank, all otherthings b'eing'dqu l'Outstanding checks will cause the cash balance perledger to be greater than the balance reported by thebank, all other things being equal.The cash amount reported in the statement offinancial position must be the balance reported in thebank statement.

ANSWER L4-26

b.

c.

d.

1.2.oo.4.D.

cccba