Which Of The Following Items Would Be Considered "Cash" And Reflected In A Company's Cash Account? (Check All That Apply.)
Money orders can be used as cash receipts & payments just like Cash
is used to pay bills, pay salaries, receive payments, etc. Money orders can be
used as a exchange of money to buy goods or services just like cash does. Money
orders contain the guaranteed amount of money agreed upon between two parties
for the exchange of goods or services. It is made by third-party distributor
like Post Office, MoneyGram Company, etc. They charge a small fee for the
process.
Coins, which usually consist of metal, are used as a money, so these can be
used as a cash just like paper money. Coins are used to pay bills, paying
liability or to acquire assets. However, coins have weights and difficult to use
for receipts and payments unlike paper money. These are issued by the central
bank of a country. These can be included in the cash balance of a company’s
business.
A check / cheque can be used for deposit & withdrawal of money from the
customer’s bank account to someone’ else account or to the person named on it
i.e., payee or bearer of the check for receipts and payments purposes. The
amount of cash is written on a check.
The option D is incorrect choice as Prepaid Accounts are not in the form of
physical cash but these represent the payments made in advance against the
benefits or services yet to be received.
The option E is also wrong choice as Account Receivables show the amount of cash to be received from customers, who promised to pay for sales on account. However, these are Quick Assets which can be converted into cash very quickly as compare to prepaid assets and inventory
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