1. The company has $10,000 in its checking account, $20,000 in its savings accou
ID: 2573230 • Letter: 1
Question
1. The company has $10,000 in its checking account, $20,000 in its savings account, $1,000 in petty cash, $25,000 in one-year Treasury bills, and $15,000 in a money market fund. What amount should be reported as cash and cash equivalents on the balance sheet?
3. What is the purpose of the closing process?
The company has $10,000 in its checking account, $20,000 in its savings account, $1,000 in petty cash, $25,000 in one-year Treasury bills, and $15,000 in a money market fund. What amount should be reported as cash and cash equivalents on the balance sheet? O $30,000 O $31,000 $46,000 O $71,000Explanation / Answer
1. The term cash and cash equivalents includes: currency, coins, checks received but not yet deposited, checking accounts, petty cash, savings accounts, money market accounts, and short-term, highly liquid investments with a maturity of three months or less at the time of purchase such as U.S. treasury bills and commercial paper.
Thus all the above amount will be include in acsh & cash equivalent except $25,000 in one-year Treasury bills,as this should be for 3 months or less.
thus ans is $ 46000.
2. Every time a payment is made through petty cash, it is recorded in the petty cash register usually by the cashier. thus ans b is correct.
3. The purpose of the closing process is to close out the balances in those accounts, allowing them to start with a balance of zero the next month.
thus ans b is correct
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