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AC 7&8 MIDTERM EXAMINATIONS
THEORIES
1. Financial assets include all of the following, except?
a. Trade accounts from customers
b. Prepaid expenses
c. Cash on hand
d. Loan receivable
2. A financial asset is any of the following, except?
a. Contractual right to exchange financial asset or financial liabilities with another
entity under conditions that are potentially unfavorable to the entity
b. Contractual right to receive cash or another financial asset from another entity.
c. An equity instrument of another entity.
d. Cash
3. How should preference shares that are redeemable mandatorily be presented in
the statement of financial position?
a. Noncurrent financial liability
b. Equity
c. Current financial liability
d. Either current or noncurrent financial liability depending on the
redemption date.
4. Which of the following should be considered cash?
a. Certificates of deposit c. Money market instruments
b. PMO d. Treasury bills
5. What is compensating balance?
a. Savings account balance
b. Loan account with the bank
c. Minimum deposit required to be maintained in relation to
borrowing agreement
d. Minimum deposit required to be maintained in relation to maintaining good
cash ratio in financial statements analysis
6. Deposits held as compensating balances .
a. Usually do not earn interest
b. If legally restricted and held against short-term credit may be included in cash
c. If legally restricted and held against long-term credit may be included
among current assets
d. If not legally restricted and held against short-term credit may be included
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in cash
Page 2 of 14
AC 7&8 MIDTERM EXAMINATIONS
THEORIES
1. Financial assets include all of the following, except?
a. Trade accounts from customers
b. Prepaid expenses
c. Cash on hand
d. Loan receivable
2. A financial asset is any of the following, except?
a. Contractual right to exchange financial asset or financial liabilities with another
entity under conditions that are potentially unfavorable to the entity
b. Contractual right to receive cash or another financial asset from another entity.
c. An equity instrument of another entity.
d. Cash
3. How should preference shares that are redeemable mandatorily be presented in
the statement of financial position?
a. Noncurrent financial liability
b. Equity
c. Current financial liability
d. Either current or noncurrent financial liability depending on the
redemption date.
4. Which of the following should be considered cash?
a. Certificates of deposit c. Money market instruments
b. PMO d. Treasury bills
5. What is compensating balance?
a. Savings account balance
b. Loan account with the bank
c. Minimum deposit required to be maintained in relation to
borrowing agreement
d. Minimum deposit required to be maintained in relation to maintaining good
cash ratio in financial statements analysis
6. Deposits held as compensating balances .
a. Usually do not earn interest
b. If legally restricted and held against short-term credit may be included in cash
c. If legally restricted and held against long-term credit may be included
among current assets
d. If not legally restricted and held against short-term credit may be included
Page 1 of 14
, 1
in cash
Page 2 of 14
