Question
Why does kiting overstate cash?
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Answer
It records a transfer before the disbursing bank clears it.
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Question
Why do deposits in transit not require a journal entry?
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Answer
They already belong to the company and self-correct with time.
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Question
How should a legally restricted compensating balance be classified?
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Answer
Separately as restricted cash or other assets.
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Question
Why is a postdated check not cash when received?
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Answer
It is not yet negotiable.
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