Items classified as "cash" on the balance sheet: a

Business Feb 02, 2021

Items classified as "cash" on the balance sheet:

a. are limited to coins, currency, or bank drafts

b. must be available to pay current obligations

c. maybe subject to contractual restrictions

d. do not include negotiable checks or bank drafts

Expert Solution

The correct answer is b. must be available to pay current obligations.

An item would be recognized as cash if this is available for the company's current debts. If the cash is restricted and intended for the payment of long-term obligations, it would be reclassified.

Cash is not limited to coins, currency, or bank drafts. There are also dated checks, treasury bills, etc. This should not have restrictions.

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