which of the following items are not included in cash? multiple choice question. cash in savings account currency and coins balance in checking accounts accounts receivable from customers
The Correct Answer and Explanation is :
The correct answer is accounts receivable from customers.
Explanation:
Cash is generally defined as money that is readily available for transactions, which can be either in physical form or in an account where it is immediately accessible for spending or withdrawal. However, not all liquid assets are classified as cash. Here is an explanation of each option:
- Cash in savings account: While a savings account is typically meant for savings rather than transactions, the funds in it are still considered cash. These funds can be quickly converted into currency or transferred to checking accounts, making them part of cash equivalents. Therefore, cash in a savings account is included in cash.
- Currency and coins: This is the most straightforward form of cash, comprising physical money such as bills and coins. Currency and coins are always included in cash as they represent the most liquid form of money.
- Balance in checking accounts: A checking account is a deposit account held at a financial institution that allows withdrawals and deposits. It is used for day-to-day transactions, such as paying bills or receiving payments. The funds in a checking account are also considered cash because they can be easily accessed and used for transactions. So, balance in checking accounts is included in cash.
- Accounts receivable from customers: This refers to amounts owed by customers for goods or services provided on credit. While accounts receivable are assets, they are not considered cash. The reason is that accounts receivable represent money that is expected to be received in the future, but it is not immediately available for use in transactions. Therefore, accounts receivable from customers is not included in cash.
Conclusion:
In financial accounting, the term “cash” is restricted to money that is available for immediate use, such as currency, coins, and balances in checking and savings accounts. Accounts receivable, while an important asset, represent money to be collected in the future and are not considered part of cash.