True (a) / False (b) 1. Cash and inventory are not vulnerable to theft 2. Cash e

Question

True (a) / False (b) 1. Cash and inventory are not vulnerable to theft 2. Cash equivalents are defined as investments that carry terms of 60 days or less. 3. A petty cash fund is established for small payments for which writing a check is impractical. 4. Publicly held companies that have inventory and good internal controls do not have to have annual physical inventories. 5. Publicly held companies must have an audit once a year. 6. Separation of duties is considered to be an acceptable method for creating sound controls in the business environment. 7. A petty cash fund is an example of an imprest system. 8. Cash equivalents are categorized as short-term investments on the balance sheet. 9. After a bank reconciliation is completed. journal entries arc prepared for items in the balance per the hank section only. 10. On a bank reconciliation, a deposit in transit would be added to the balance per bank section.

Explanation / Answer

False , cash & inventory are very much Vulnerable to theft. False , cash equivalents are idle cash that can be utilised for funding any activity . True , Petty cash fund is used to pay out small amount for routine small expense. False, Public listed companies should carry annual physical verification even they have good internal controls. True, Public Held company must have audit once in a year.

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