Lori's Company has the following items: cash in a checking account,$1,000; cash in a savings account,$4,000; high-grade government securities due in one month,$3,586; accounts receivable,$3,000; cash in a compensating balance agreement,$3,200.How much should appear as Cash and Cash Equivalents on the balance sheet?
A)$4,000
B)$8,586
C)$11,558
D)$11,786

Question

Quizplus · Accepted Answer

Cash and Cash Equivalents include cash in checking accounts, cash in savings accounts, and investments in highly liquid and marketable securities. Therefore, the total amount of Cash and Cash Equivalents for Lori's Company is the sum of all the amounts listed except for accounts receivable, which is not a type of cash or cash equivalent. Thus, $1,000 + $4,000 + $3,586 + $3,200 = $11,786, which is closest to option B.

Lori's Company Has the Following Items: Cash in a Checking