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Answer: False. The general rule is that cash is classified as the same
classification of the purpose for which it is intended to be used. Explanation
for this can be seen below:
Cas
h
Unrestrict
ed
Reported under
the
account title
Cash
Restricted for
a specific
purpose
Settlement of a
currently
maturing
liability
Reported as a
financial asset
(current asset)
Settlement of a
long term
liability, or
restricted for the
purchase of a
non-current
asset
(regardless of
when the
Reported as
other financial
asset (plant
expansion/bon
d sinking fund)
as a noncurrent asset
12.Income and expenses are real accounts which are closed to the income
summary at the end of the accounting period
13.