The following statements relate to cash. Which statement is false? O Legally restricted compensating balances required by a bank should always be excluded from "cash and cash equivalent. O Classification of a restricted cash balance as current or noncurrent should be not parallel to the classification of the related obligation for which the cash was restricted. The term cash can refer to demand credit instruments such as money order and bank drafts. The purpose of establishing a petty cash fund is to keep enough cash for small recurring operating expenses for a period of time.

The following statements relate to cash. Which statement is false? O Legally restricted compensating balances required by a bank should always be excluded from "cash and cash equivalent. O Classification of a restricted cash balance as current or noncurrent should be not parallel to the classification of the related obligation for which the cash was restricted. The term cash can refer to demand credit instruments such as money order and bank drafts. The purpose of establishing a petty cash fund is to keep enough cash for small recurring operating expenses for a period of time.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Knott Inc. has a petty cash fund of $750. (a) Since the petty cash fund is only $750, should Knott Inc. implement controls over petty cash? (b) Whatcontrols, if any, could be used for the petty cash fund?
Review the following statements regarding a petty cash fund used in a business. Select the one that is correct. O A petty cash fund is controlled by top management. O The cashier of a fund will write checks for small payments like postage, supplies and deliveries, O Only the petty cashier is responsible for paying cash from the fund. OA check written against the fund is cashed when the fund is replenished.
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