Multiple Choice
In the context of accounting, business associate agreements (BAAs) primarily accomplish which of the following?
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1. Introduction to Accounting
Types of Accounting
Multiple Choice
Which of the following should NOT be considered cash by an accountant?
A
Money orders
B
Coins and currency on hand
C
Demand deposits in banks
D
Postdated checks received from customers
Verified step by step guidance1
Understand the definition of 'cash' in accounting: Cash includes items that are readily available for use in transactions, such as coins, currency, money orders, and demand deposits in banks. These are liquid assets that can be used immediately.
Review the concept of postdated checks: A postdated check is a check written with a future date. It cannot be cashed or deposited until the date specified on the check arrives, making it not immediately available for use.
Compare postdated checks to other items listed: Money orders, coins and currency, and demand deposits are all considered cash because they are immediately accessible for transactions. Postdated checks, however, are not accessible until the future date specified.
Determine why postdated checks are excluded: Since postdated checks cannot be used immediately, they do not meet the criteria for being classified as cash. Instead, they are typically recorded as accounts receivable or another category until they become valid.
Conclude that postdated checks should NOT be considered cash: Based on the definition and characteristics of cash in accounting, postdated checks are excluded from the cash category because they are not liquid or readily available for use.
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