Multiple Choice
Which of the following is a proper form of capital contribution for a business association?
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1. Introduction to Accounting
Types of Accounting
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Which of the following statements concerning cash is true?
A
Cash includes currency, coins, and balances in checking accounts.
B
Cash only refers to physical currency and excludes bank deposits.
C
Cash is classified as a non-current asset on the balance sheet.
D
Cash does not include checks received from customers.
Verified step by step guidance1
Understand the definition of 'cash' in financial accounting. Cash typically includes physical currency (such as coins and bills), balances in checking accounts, and other items that are readily available for use in transactions.
Review the classification of cash on the balance sheet. Cash is considered a current asset because it is highly liquid and can be used to settle short-term obligations.
Analyze whether checks received from customers are included in cash. Checks are generally considered part of cash because they represent funds that are readily available once deposited.
Evaluate the statement that cash only refers to physical currency and excludes bank deposits. This is incorrect because cash includes both physical currency and balances in checking accounts.
Determine the correct statement by comparing the options provided. The accurate statement is: 'Cash includes currency, coins, and balances in checking accounts.'
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