When a sale is made to a customer who pays with a check, the company records:

A) A debit to Cash.

B) A debit to Accounts Payable.

C) A debit to Accounts Receivable.

D) No entry until the check clears the bank.

Answer: A debit to Cash

Which of the following would not be considered good internal control for cash receipts?

A) Allowing customers to pay with a debit card.

B) Requiring the employee receiving cash from customers to also deposit the cash into the company's bank account.

C) Recording cash receipts as soon as they are received.

D) Allowing customers to pay with a credit card.

Answer: Requiring the employee receiving cash from customers to also deposit the cash into the company's bank account.

Which of the following would NOT represent good controls over cash receipts?

A) Record all cash receipts as soon as possible.

B) The employee that receives cash and checks should also deposit them in the bank.

C) Open mail each day and make a list of checks received with the amount and payer's name.

D) Verify cash receipts by comparing the bank deposit slip with the accounting records.

Answer: The employee that receives cash and checks should also deposit them in the bank.

Which of the following would NOT be recorded as a cash sale?

A) Customer who pays with a check.

B) Customer who pays with a debit card.

C) Customer who pays with a credit card.

D) A customer who buys on account.

Answer: A customer who buys on account.

Which of the following sales would typically be reported as a cash sale?

A) Sale in exchange for office supplies received.

B) Sale in exchange for equipment received.

C) Sale on account.

D) Sale with credit card.

Answer: Sale with credit card.

Common examples of cash equivalents include all of the following except:

A) Money market funds.

B) Treasury bills.

C) Certificates of deposit.

D) Accounts receivable.

Answer: Accounts receivable.

Cash equivalents refer to:

A) Short-term investments that have a maturity date no longer than three months from the date of purchase.

B) Amounts receivable from customers that have a very high probability of collection.

C) Short-term investments that have increased in value since the date of purchase, and therefore have generated additional cash for the company.

D) The total amount of cash a company would have if all assets were sold.

Answer: Short-term investments that have a maturity date no longer than three months from the date of purchase.