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Cash Equivalents Are Included in the Calculation of the Cash

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True/False

Cash equivalents are included in the calculation of the cash ratio.


Definitions:

Bank Reconciliation

The method of aligning the balance in a company's financial records for a cash account with the relevant details on a bank statement.

Deposits in Transit

Funds that have been received and recorded by a business but not yet processed or acknowledged by the bank.

Allowance Method

An accounting technique used to estimate and account for bad debts where the company anticipates a certain percentage of accounts receivable will be uncollectible.

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