AC 7&8 MIDTERM EXAM WITH COMPLETE
SOLUTIONS QUESTIONS AND ANSWERS
GRADED A+ LATEST UPDATE 2022/2023
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
Page 1 of 23
AC 7&8 MIDTERM EXAM WITH COMPLETE
SOLUTIONS QUESTIONS AND ANSWERS
GRADED A+ LATEST UPDATE 2022/2023
,AC 7&8 MIDTERM EXAM WITH COMPLETE
SOLUTIONS QUESTIONS AND ANSWERS
GRADED A+ LATEST UPDATE 2022/2023
d. If not legally restricted and held against short-term credit may be included
in cash
Page 2 of 23
AC 7&8 MIDTERM EXAM WITH COMPLETE
SOLUTIONS QUESTIONS AND ANSWERS
GRADED A+ LATEST UPDATE 2022/2023
, AC 7&8 MIDTERM EXAM WITH COMPLETE
SOLUTIONS QUESTIONS AND ANSWERS
GRADED A+ LATEST UPDATE 2022/2023
7. All of the following can be classified as cash and cash equivalents, except?
a. Redeemable preference shares acquired and due in and due in 60 days
b. Commercial papers held and due for repayment in 90 days
c. Equity instruments
d. A bank overdraf
8. What is the major purpose of an imprest petty cash fund?
a. To effectively plan cash inflows and outflows
b. To ease the payment to cash vendors
c. To determine the honesty of employees
d. To effectively control cash disbursements
9. Which of the following statements concerning compensating balance agreements
is not true?
a. They reduce the amount of cash available to borrower
b. They always involve legal restrictions on the cash received
c. They increase the effective rate to the borrower
d. They must be disclosed in the financial statement footnotes
10. Cash control systems are the methods and procedures to ensure .
a. That current obligations are met
b. That excess cash does not exist
c. The safeguarding of cash
d. The unused cash is invested
11. Which is not a key element of internal control over cash receipts?
a. Cash deposit on a regular basis
b. Daily entry in a voucher register
c. Daily recording of all cash receipts in the accounting records
d. Immediate counting by the person opening the mall or using the cash register
12. Under the imprest petty cash system, expenses out of the petty cash fund
are recorded.
a. Upon disbursement
b. Upon replenishment
Page 3 of 23
AC 7&8 MIDTERM EXAM WITH COMPLETE
SOLUTIONS QUESTIONS AND ANSWERS
GRADED A+ LATEST UPDATE 2022/2023
SOLUTIONS QUESTIONS AND ANSWERS
GRADED A+ LATEST UPDATE 2022/2023
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
Page 1 of 23
AC 7&8 MIDTERM EXAM WITH COMPLETE
SOLUTIONS QUESTIONS AND ANSWERS
GRADED A+ LATEST UPDATE 2022/2023
,AC 7&8 MIDTERM EXAM WITH COMPLETE
SOLUTIONS QUESTIONS AND ANSWERS
GRADED A+ LATEST UPDATE 2022/2023
d. If not legally restricted and held against short-term credit may be included
in cash
Page 2 of 23
AC 7&8 MIDTERM EXAM WITH COMPLETE
SOLUTIONS QUESTIONS AND ANSWERS
GRADED A+ LATEST UPDATE 2022/2023
, AC 7&8 MIDTERM EXAM WITH COMPLETE
SOLUTIONS QUESTIONS AND ANSWERS
GRADED A+ LATEST UPDATE 2022/2023
7. All of the following can be classified as cash and cash equivalents, except?
a. Redeemable preference shares acquired and due in and due in 60 days
b. Commercial papers held and due for repayment in 90 days
c. Equity instruments
d. A bank overdraf
8. What is the major purpose of an imprest petty cash fund?
a. To effectively plan cash inflows and outflows
b. To ease the payment to cash vendors
c. To determine the honesty of employees
d. To effectively control cash disbursements
9. Which of the following statements concerning compensating balance agreements
is not true?
a. They reduce the amount of cash available to borrower
b. They always involve legal restrictions on the cash received
c. They increase the effective rate to the borrower
d. They must be disclosed in the financial statement footnotes
10. Cash control systems are the methods and procedures to ensure .
a. That current obligations are met
b. That excess cash does not exist
c. The safeguarding of cash
d. The unused cash is invested
11. Which is not a key element of internal control over cash receipts?
a. Cash deposit on a regular basis
b. Daily entry in a voucher register
c. Daily recording of all cash receipts in the accounting records
d. Immediate counting by the person opening the mall or using the cash register
12. Under the imprest petty cash system, expenses out of the petty cash fund
are recorded.
a. Upon disbursement
b. Upon replenishment
Page 3 of 23
AC 7&8 MIDTERM EXAM WITH COMPLETE
SOLUTIONS QUESTIONS AND ANSWERS
GRADED A+ LATEST UPDATE 2022/2023
