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Theory of Accounts Cash and Cash Equivalents

BS accountancy (University of Cebu)

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1. As contemplated in accounting, cash includes d. Cash equivalents should be measured at maturity value,
meaning face value plus interest
a. Money only
b. Money and any negotiable instrument 5. If material, deposits in foreign bank which are subject to
c. Any negotiable instrument foreign exchange restriction should be classified
d. Money and any negotiable instrument that is payable in
money and acceptable by the bank for deposit and a. Separately as current asset, with appropriate disclosure
immediate credit b. Separately as a non-current asset with appropriate
disclosure
2. To be reported as “cash and cash equivalent”, the cash and c. Be written off as an extraordinary loss
cash equivalent must be d. As part of cash and cash equivalents

a. Unrestricted in use for current operations 6. Bank overdraft

b. Available for the purchase of property, plant and
equipment a. Is a debit balance in a cash in bank account
c. Set aside for the liquidation of long-term debt b. Is offset against demand deposit account in another bank
d. Deposited in the bank c. Which cannot be offset is classified as a current
liability
3. Cash equivalents are d. Which cannot be offset is classified as non-current
liability
a. Short-term and highly liquid investments that are readily
convertible into cash
b. Short-term and highly liquid investments that are readily 7. A compensating balance
convertible into cash with remaining maturity of three
months a. Must be included in cash and cash equivalent
c. Short-term and highly liquid investments that are readily b. Which is legally restricted and related to a long-term
convertible into cash with remaining maturity of three loan is classified as a current asset
months c. Which is legally restricted and related to a short-term
d. Short-term and highly liquid marketable equity securities loan is classified separately as a current asset
d. Which is not legally restricted as to withdrawal is
4. Which is false concerning measurement of cash and cash classified separately as current asset
equivalents? 8. Unreleased checks

a. Cash is measured at face value a. Should be treated as outstanding checks

b. Cash in foreign currency is measured at the current b. Should be restores to the cash balance
exchange rate c. Should be treated as outstanding checks if the date is
c. If a bank or financial institution holding the funds of shortly after the balance sheet
the company is in bankruptcy or financial difficulty, d. Should be treated as outstanding checks if they are
cash should be written down to estimated realizable value ultimately encashed

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a. Separation of duties
9. Which of the following should not be considered cash for b. Assignment of responsibility
financial reporting purposes? c. Proper authorization
d. Imprest system
a. Petty cash funds and change funds
b. Money orders, certified checks and personal checks 14. What is the major purpose of an imprest petty cash fund?
c. Coin, currency and available funds
d. Post-dated checks and IOUs a. To effectively plan cash inflows and outflows
b. To ease the payment of cash to vendors
10. Which of the following is usually considered cash? c. To determine the honesty of the petty cashier
d. To effectively control cash disbursements
a. Certificates of deposit
b. Checking accounts 15. What happens when a petty cash is in use?
c. Money market savings certificates
d. Post-dated checks a. Expenses paid with petty cash are recorded when the fund
is replenished
11. Petty cash fund is b. Most small amounts are paid from cash receipts before
they are deposited
a. Separately classified as current asset c. Petty cash is debited when the fund is replenished
b. Money kept on hand for making minor disbursements of coin d. Petty cash is credited when the fund is replenished
and currency rather than by writing checks
c. Set aside for the payment of payroll 16. When a petty cash fund is sued, which of the following is
d. Restricted cash true?

12. The petty cash account under the imprest fund system is a. The balance of petty cash fund should be reported on the
debited balance sheet as a long-term investment
b. The petty cashier’s summary of petty cash payments serves
a. Only when the fund is created s a journal entry that is posted to the appropriate
b. When the fund is created and every time it is replenished general ledger account
c. When the fund is created and when the size of the funds c. The reimbursement of the petty cash fund should be
is increased credited to the cash account
d. When the fund is created and when the size of the funds d. Entries that include a credit to the cash account should
is decreased be recorded at the time the payments from the petty cash
fund are made

17. In reimbursing the petty cash fund, which of the following

13. The internal control feature that is specific to petty is true?
cash is
a. Cash is debited

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b. Petty cash is debited d. A credit balance in a cash short or over account should
c. Petty cash is credited be considered a liability because the short changed
d. Expense accounts are debited customer will demand return of this amount

18. A cash over and short account 21. A bank reconciliation is

a. In not generally accepted a. A formal financial statement that lists all of the bank
b. Is debited when the petty cash fund proves out over account balances of an enterprise
c. Is debited when the petty cash fund proves out short b. A merger of two banks that previously where competitors
d. Is a contra account to cash c. A statement send by the bank to depositor on a monthly
basis
19. The following statements pertain to accounting for petty d. A schedule that accounts for the differences between an
cash fund. Which statement is false? enterprise’s cash balance as shown on its bank statement
and the cash balance shown in its general ledger
a. Each disbursement from petty cash should be supported by
a petty cash voucher 22. Which of the following items must be added to the cash
b. The creation of a petty cash fund requires a journal balance per ledger in preparing a bank reconciliation which
entry to reflect the transfer of fund out of the general ends with the adjusted cash balance?
cash account
c. At any time, the sum of cash in the petty cash fund and a. Note receivable collected by bank in favor of the
the total of petty cash vouchers should equal the amount depositor and credited to the account of the depositor
for which the imprest petty cash fund was established b. NSF customer check
d. With the establishment of an imprest petty cash fund, one c. Service charge
person is given the authority and responsibility for d. Erroneous bank debit
issuing checks to cover minor disbursements

20. The following statements pertain to the cash short or over

account. Which statement is true? 23. Which of the following must be deducted from the bank
statement balance in preparing a bank reconciliation which
a. It would be impossible to have cash shortage or overage ends with adjusted cash balance?
if employees were paid in cash rather than by check
b. The entry to account for daily cash sales for which a a. Deposit in transit
small amount of cash shortage existed would include a b. Outstanding check
debit to cash short or over account c. Reduction of loan charged to the account of the depositor
c. If the cash short or over account has a debit balance at d. Certified check
the end of the period it must be debited to an expense
account 24. If the balance shown on a company’s bank statement is less
than the correct cash balance and neither the company nor the
bank has made any errors, there must be

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d. The cash amount shown in the balance sheet must be the

a. Deposits credited by the bank but not yet recorded by the balance reported in the bank statement
company
b. Outstanding checks
c. Deposits in transit 28. Which of the following statement is false?
d. Bank charges not yet recorded by the company
a. A certified check is a liability of the bank certifying
25. If the cash balance shown on a company’s accounting it
records is less than the correct cash balance and neither the b. A certified check will be accepted by many persons who
company nor the bank has made any errors, there must be would not otherwise accept a personal check
c. A certified check is one drawn by a bank upon itself
a. Deposits credited by the bank but not yet recorded by the d. A certified check should not be included in the
company outstanding checks
b. Outstanding checks
c. Deposits in transit 29. A proof of cash
d. Bank charges not yet recorded by the company
a. Is a physical count of currencies on hand on balance
26. Which will not require an adjusting entry on the sheet date
depositor’s books? b. Is a formal statement showing that total cash receipts
during the year
a. NSF check from customer c. Is a four-column bank reconciliation showing
b. Check in payment of account payable amounting to P50,000 reconciliation of cash balances per book and per bank at
is recorded by the depositor as P5,000 the beginning and end of the current month and
c. C. Deposit of another entity credited to the account of reconciliation of cash receipts and cash disbursements of
the depositor the bank and the depositor during the current month
d. Bank service charge d. Is a summary of cash receipts and cash payments

27. Which statement is true? 30. A proof of cash would be useful for

a. Bank service charge will cause the cash balance per a. Discovering cash receipts that have not been recorded in
ledger to be higher than that reported by the bank, all the journal
other things being equal b. Discovering time lag in making deposits
b. Outstanding checks will cause the cash balance per ledger c. Discovering cash receipts that have been recorded but
to be greater than the balance reported by the bank, all have not been deposited
other things being equal d. Discovering an inadequate separation of incompatible
c. An error made by the bank by charging an amount to the duties of employees
depositor’s account requires a correcting entry in the
depositor’s own records 31. The following statements relate to cash. Which statements
is true?

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b. A check issued by the entity on December 27 of the

a. The term cash equivalent refers to demand credit current year but dated January 15 of next year
instruments such as money order and bank drafts c. Time deposit which matures in one year
b. The purpose of establishing a petty cash fund is to keep d. A customer’s check denominated in a foreign currency
enough cash on hand to cover all normal operating
expenses for a period of time 35. At December 31 of the current year, an entity had cash
c. Classification of a restricted cash balance as current or accounts at three different banks. One account balance is
noncurrent should parallel the classification of the segregated solely for payment into a bond sinking fund. A
related obligation for which cash was restricted second account, used for branch operations, is overdrawn. The
d. Compensating balance required by a bank should always be third account, used for regular corporate operations, has a
excluded from cash and cash equivalents positive balance. How should these accounts be reported in the
December 31 classified balance sheet?
32. Which is not considered as a cash equivalent?
a. The segregated account should be reported as a non-
a. A three-year treasury note maturing on May 30 of the current asset, the regular account should be reported as
current year purchased by the entity on April 15 of the a current asset, and the overdraft should be reported as
current year a current liability
b. A three-year treasury note maturing on May 30 of the b. The segregated and regular accounts should be reported as
current year purchased by the entity on January 15 of the current assets, and the overdraft should be reported as a
current year current liability
c. A 90-day T-bill c. The segregated account should be reported as a non-
d. A 6-day money market placement current asset and the regular account should be reported
33. As of December 31 of the current year, an entity had as a current asset net of the overdraft
various checks and papers in its safe. Which item should not d. The segregated and regular accounts should be reported as
be in its cash account in the current year-end balance sheet? current assets net of the overdraft

a. US$ 20,000 cash 36. Which of the following can qualify as cash equivalents?
b. Past due promissory note issued in favor of the entity by
its President a. Highly liquid investments that are acquired three months
c. Another entity’s P150,000 check payable to the entity before maturity
dated December 15 of the current year b. Highly liquid investments that are acquired three months
d. The entity’s undelivered check payable to a supplier after maturity
dated December 31 of the current year c. Equity securities
d. Redeemable preferred shares
34. Which item should be excluded from cash and cash
equivalent on the current year-end balance sheet of an entity?

a. The minimum cash balance in the entity’s current account 37. Preferred shares can qualify as cash equivalent if
which is maintained to avoid service charges

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Statement 1 – It has a specified redemption date a. Window dressing is a practice of closing the books of
accounts at the end of the accounting period for a better
Statement 2 – Acquired three months before redemption date financial position and performance
b. Lapping consists of misappropriating a collection from
a. Statement 1 only one customer and concealing this defalcation when
b. Statement 2 only collection is made from another customer
c. Both statements c. Kiting is a transfer of cash from one bank to another
d. Preferred shares do not qualify as cash equivalent bank
d. The imprest system required that all cash receipts should
38. Which of the following statements is false? be deposited intact and all cash payments should be made
by means of a check
a. Investments in time deposits, money market instruments
and treasury bills are classified as cash equivalent if
the term is three months or less
b. Investments in time deposits, money market instruments 41. Which of the following statements is (are) true regarding
and treasury bills are classified as cash equivalent if the imprest fund system?
the term is more than three months but within the year
c. Investments in time deposits, money market instruments Statement 1 – Petty cash expenses are immediately recorded
and treasury bills are classified as long-term
investments if the term is more than one year Statement 2 – The amount of replenishment is normally equal to
d. Investments in time deposits, money market instruments the petty cash disbursements
and treasury bills are classified as short-term
investments if the term is more than three months but a. Statement 1 only
within the year b. Statement 2 only
c. Both statements
39. Which of the following statements is false? d. None of the statements

a. Undelivered or unreleased checks should be treated as 42. Which of the following statements is (are) true regarding
outstanding checks the fluctuating fund system?
b. Undelivered or unreleased checks should be restored to
the cash balance Statement 1 – Petty cash expenses are immediately recorded
c. Post-dated checks that are delivered should be restored
to the cash balance Statement 2 – The amount of replenishment is may be equal to,
d. Stale checks should be restored to the cash balance more or less than the petty cash disbursements

40. Which of the following statements is false? a. Statement 1 only

b. Statement 2 only
c. Both statements
d. None of the statements

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1. As contemplated in accounting, cash includes

43. Which of the following items are not normally taken in the e. Money only
cash balance per ledger to arrive at the adjusted cash f. Money and any negotiable instrument
balance? g. Any negotiable instrument
h. Money and any negotiable instrument that is payable in money and acceptable by the bank for
a. Bank error deposit and immediate credit
b. Bank service charge 2. To be reported as “cash and cash equivalent”, the cash and cash equivalent must be
c. Unrecorded collections made by the bank in behalf of the e. Unrestricted in use for current operations
entity
f. Available for the purchase of property, plant and equipment
d. Book error
g. Set aside for the liquidation of long-term debt
- END – h. Deposited in the bank
3. Cash equivalents are
e. Short-term and highly liquid investments that are readily convertible into cash
f. Short-term and highly liquid investments that are readily convertible into cash with remaining
maturity of three months or more
g. Short-term and highly liquid investments that are readily convertible into cash with remaining
maturity of three months or less
h. Short-term and highly liquid marketable equity securities
4. Which is false concerning measurement of cash and cash equivalents?
e. Cash is measured at face value
f. Cash in foreign currency is measured at the current exchange rate
g. If a bank or financial institution holding the funds of the company is in bankruptcy or financial
difficulty, cash should be written down to estimated realizable value
h. Cash equivalents should be measured at maturity value, meaning face value plus interest
5. If material, deposits in foreign bank which are subject to foreign exchange restriction should be
classified
e. Separately as current asset, with appropriate disclosure
f. Separately as a non-current asset with appropriate disclosure
g. Be written off as an extraordinary loss
h. As part of cash and cash equivalents
6. Bank overdraft
e. Is a debit balance in a cash in bank account
f. Is offset against demand deposit account in another bank
g. Which cannot be offset is classified as a current liability
h. Which cannot be offset is classified as non-current liability
7. A compensating balance
e. Must be included in cash and cash equivalent

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f. Which is legally restricted and related to a long-term loan is classified as a current asset f. Petty cash is debited
g. Which is legally restricted and related to a short-term loan is classified separately as a current g. Petty cash is credited
asset h. Expense accounts are debited
h. Which is not legally restricted as to withdrawal is classified separately as current asset 15. A cash over and short account
8. Unreleased checks e. In not generally accepted
e. Should be treated as outstanding checks f. Is debited when the petty cash fund proves out over
f. Should be restored to the cash balance g. Is debited when the petty cash fund proves out short
g. Should be treated as outstanding checks if the date is shortly after the balance sheet h. Is a contra account to cash
h. Should be treated as outstanding checks if they are ultimately encashed 16. The following statements pertain to accounting for petty cash fund. Which statement is false?
9. Which of the following should not be considered cash for financial reporting purposes? e. Each disbursement from petty cash should be supported by a petty cash voucher
e. Petty cash funds and change funds f. The creation of a petty cash fund requires a journal entry to reflect the transfer of fund out of the
f. Money orders, certified checks and personal checks general cash account
g. Coin, currency and available funds g. At any time, the sum of cash in the petty cash fund and the total of petty cash vouchers should
h. Post-dated checks and IOUs equal the amount for which the imprest petty cash fund was established
10. Which of the following is usually considered cash? h. With the establishment of an imprest petty cash fund, one person is given the authority and
e. Certificates of deposit responsibility for issuing checks to cover minor disbursements
f. Checking accounts 17. The following statements pertain to the cash short or over account. Which statement is true?
g. Money market savings certificates e. It would be impossible to have cash shortage or overage if employees were paid in cash rather
h. Post-dated checks than by check
11. Petty cash fund is f. The entry to account for daily cash sales for which a small amount of cash shortage existed would
e. Separately classified as current asset include a debit to cash short or over account
f. Money kept on hand for making minor disbursements of coin and currency rather than by writing g. If the cash short or over account has a debit balance at the end of the period it must be debited to
checks an expense account
g. Set aside for the payment of payroll h. A credit balance in a cash short or over account should be considered a liability because the short
h. Restricted cash changed customer will demand return of this amount
12. The petty cash account under the imprest fund system is debited 18. A bank reconciliation is
e. Only when the fund is created e. A formal financial statement that lists all of the bank account balances of an enterprise
f. When the fund is created and every time it is replenished f. A merger of two banks that previously where competitors
g. When the fund is created and when the size of the funds is increased g. A statement send by the bank to depositor on a monthly basis
h. When the fund is created and when the size of the funds is decreased h. A schedule that accounts for the differences between an enterprise’s cash balance as shown on its
13. The internal control feature that is specific to petty cash is bank statement and the cash balance shown in its general ledger
e. Separation of duties 19. Which of the following items must be added to the cash balance per ledger in preparing a bank
f. Assignment of responsibility reconciliation which ends with the adjusted cash balance?
g. Proper authorization e. Note receivable collected by bank in favor of the depositor and credited to the account of the
h. Imprest system depositor
14. In reimbursing the petty cash fund, which of the following is true? f. NSF customer check
e. Cash is debited g. Service charge

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h. Erroneous bank debit g. Is a four-column bank reconciliation showing reconciliation of cash balances per book and per bank
20. Which of the following must be deducted from the bank statement balance in preparing a bank at the beginning and end of the current month and reconciliation of cash receipts and cash
reconciliation which ends with adjusted cash balance? disbursements of the bank and the depositor during the current month
e. Deposit in transit h. Is a summary of cash receipts and cash payments
f. Outstanding check 26. The following statements relate to cash. Which statement is true?
g. Reduction of loan charged to the account of the depositor e. The term cash equivalent refers to demand credit instruments such as money order and bank
h. Certified check drafts
21. If the balance shown on a company’s bank statement is less than the correct cash balance and neither f. The purpose of establishing a petty cash fund is to keep enough cash on hand to cover all normal
the company nor the bank has made any errors, there must be operating expenses for a period of time
e. Deposits credited by the bank but not yet recorded by the company g. Classification of a restricted cash balance as current or noncurrent should parallel the classification
f. Outstanding checks of the related obligation for which cash was restricted
g. Deposits in transit h. Compensating balance required by a bank should always be excluded from cash and cash
h. Bank charges not yet recorded by the company equivalents
22. If the cash balance shown on a company’s accounting records is less than the correct cash balance 27. Which is not considered as a cash equivalent?
and neither the company nor the bank has made any errors, there must be e. A three-year treasury note maturing on May 30 of the current year purchased by the entity on April
e. Deposits credited by the bank but not yet recorded by the company 15 of the current year
f. Outstanding checks f. A three-year treasury note maturing on May 30 of the current year purchased by the entity on
g. Deposits in transit January 15 of the current year
h. Bank charges not yet recorded by the company g. A 90-day T-bill
23. Which will not require an adjusting entry on the depositor’s books? h. A 6-day money market placement
e. NSF check from customer 28. As of December 31 of the current year, an entity had various checks and papers in its safe. Which item
f. Check in payment of account payable amounting to P50,000 is recorded by the depositor as should not be in its cash account in the current year-end balance sheet?
P5,000 e. US$ 20,000 cash
g. Deposit of another entity credited to the account of the depositor f. Past due promissory note issued in favor of the entity by its President
h. Bank service charge g. Another entity’s P150,000 check payable to the entity dated December 15 of the current year
24. Which statement is true? h. The entity’s undelivered check payable to a supplier dated December 31 of the current year
e. Bank service charge will cause the cash balance per ledger to be higher than that reported by the 29. Which item should be excluded from cash and cash equivalent on the current year-end balance sheet of
bank, all other things being equal an entity?
f. Outstanding checks will cause the cash balance per ledger to be greater than the balance reported e. The minimum cash balance in the entity’s current account which is maintained to avoid service
by the bank, all other things being equal charges
g. An error made by the bank by charging an amount to the depositor’s account requires a correcting f. A check issued by the entity on December 27 of the current year but dated January 15 of next year
entry in the depositor’s own records g. Time deposit which matures in one year
h. The cash amount shown in the balance sheet must be the balance reported in the bank statement h. A customer’s check denominated in a foreign currency
25. A proof of cash 30. At December 31 of the current year, an entity had cash accounts at three different banks. One account
e. Is a physical count of currencies on hand on balance sheet date balance is segregated solely for payment into a bond sinking fund. A second account, used for branch
f. Is a formal statement showing that total cash receipts during the year

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operations, is overdrawn. The third account, used for regular corporate operations, has a positive c. P 3,500,000
balance. How should these accounts be reported in the December 31 classified balance sheet? d. P 6,500,000
e. The segregated account should be reported as a non-current asset, the regular account should be 2. On December 31, 2015, DALTA Inc. reported cash accounts with the following details:
reported as a current asset, and the overdraft should be reported as a current liability Undeposited collections………………………………….............................. P
f. The segregated and regular accounts should be reported as current assets, and the overdraft 60,000
should be reported as a current liability Cash in bank – PCIB checking account………………….…………………..
500,000
g. The segregated account should be reported as a non-current asset and the regular account should
Cash in bank – PNB (overdraft)…………………………….…………………
be reported as a current asset net of the overdraft (50,000)
h. The segregated and regular accounts should be reported as current assets net of the overdraft Undeposited NSF check received from customer dated 12/01/14………..
15,000
PROBLEMS Undeposited customer check, dated 01/15/25………………………………
25,000
1. San Miguel Corporation provided the following data on December 31, 2014: Cash in bank – PCIB (fund for payroll)……………………………………….
Checkbook balance……………………………………………………………… P 150,000
4,000,000 Cash in bank – PCIB (savings deposit)………………………………………
Bank statement balance………………………………………………………… 100,000
5,000,000 Cash in bank – PCIB (90-day money market instrument)………………….
Check drawn on San Miguel’s account, payable to supplier, dated 2,000,000
and recorded on December 31, 2015 but not mailed until Cash in foreign bank – restricted………………………………………………
until January 2016……………………………………………………… 100,000
500,000 IOUs from officers……………………………………………………………….
Cash in sinking fund…………………………………………………………….. 30,000
2,000,000 Sinking fund cash……………………………………………………………….
On December 31, 2015, what amount of cash should be reported as cash under current assets? 450,000
a. P 4,500,000 Financial asset held for trading………………………………………………..
b. P 5,500,000 120,000
On December 31, 2014, what total amount should be reported as cash and cash equivalents?
a. P 2,660,000 c. P 2,770,000
b. P 2,810,000 d. P 810,000
3. SMART Telecoms had the following balances on December 31, 2014: Cash restricted for plant addition………………………………………………
Cash in bank…………………………………………………………………….. P 1,600,000
2,250,000 Cash in bank included P600,000 of compensating balances against short-term borrowing agreement.
Cash on hand……………………………………………………………………. The compensating balance is not legally restricted as to withdrawal. On December 31, 2015, what total
125,000 cash should be reported under current assets?
a. P 1,775,000
b. P 2,250,000
c. P 2,375,000
d. P 3,975,000

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4. Petron Tri-Activ had the following account balances on December 31, 2015: Payroll account……………………………………………………………………
Cash in bank…………………………………………………………………….. P 500,000
2,250,000 VAT account………………………………………………………………………
Cash on hand……………………………………………………………………. 400,000
125,000 Foreign bank account – in peso (unrestricted)………………………………..
Cash restricted for plant acquisition 2,000,000
(to be disbursed in 2016)….………………………………………….. Postage stamps…………………………………………………………………..
1,600,000 50,000
Cash in bank included P600,000 of compensating balance against long-term borrowing. The Employee’s postdated check……………………………………………………
compensating balance is not legally restricted as to withdrawal. On December 31, 2015, what is the total 300,000
cash to be reported under current assets? IOU from president……………………………………………………………….
a. P 1,775,000 750,000
b. P 2,250,000 Credit memo from a vendor for purchase returns…………………………….
80,000
c. P 2,375,000
Travelers check…………………………………………………………………..
d. P 3,950,000 300,000
5. F2 Logistic Cargo reported that the cash had a balance on December 31, 2015 of P 4,415,000 which NSF check………………………………………………………………………..
consisted of the following: 150,000
Petty cash fund…………………………………………………………………. P Petty cash fund (P20,000 cash & P30,000 vouchers)……………………….
24,000 50,000
Undeposited receipts including PDC for P70,000………………………….. Money order……………………………………………………………………....
1,220,000 180,000
Cash in PNB, per bank statement, with P40,000 outstanding checks…... What amount should be reported as unrestricted cash on December 31, 2015?
2,245,000 a. P5,900,000
Bonds in sinking fund………………………………………………………….. b. P4,600,000
850,000 c. P4,900,000
Vouchers paid out of collection, not yet recorded………………………….. d. P6,900,000
43,000
7. Nike reported petty cash fund with the following details:
IOUs signed by employees……………………………………………………
33,000 Currencies……………………………………………………………………….. P
What amount of cash should be reported as cash on December 31, 2015? 20,000
a. P 3,379,000 Coins………………………………………………………………………………
b. P 3,419,000 2,000
c. P 3,489,000 Petty cash vouchers
d. P 3,449,000 Gasoline payment for delivery of equipment……………………….
6. Apple Co. provided the following information with respect to the cash and cash equivalents on 3,000
December 31, 2015: Medical supplies for employees……………………………………..
Checking account at first bank…………………………………………………. P 1,000
(200,000) Repairs of office equipment………………………………………….
Checking account at second bank…………………………………………….. 1,500
3,500,000
Loans to employees…………………………………………………..
Treasury bonds…………………………………………………………………...
1,000,000 3,500
Check drawn by the entity payable to the order of Grace de la Cruz,

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the petty cash custodian, representing her salary………………… Checks drawn by the order of the custodian…………………………………
15,000 2,700
NSF employee check…………………………………………………………… What is the correct amount of petty cash fund for financial statement presentation purposes?
3,000 a. P 10,000
A sheet of paper with names of several employees together b. P 7,000
With contribution for a birthday gift of a co-employee…………….. c. P 6,000
5,000 d. P 9,000
The petty cash general ledger account has an imprest balance of P50,000. What is the amount of petty 10. Megaworld Co. established a P3000 petty cash fund. You found the following items in the fund:
cash fund that should be reported in the Statement of Financial Position? Cash & Currency…………………………………………………………………. P
a. P 27,000 1683.80
b. P 37,000 Expense Vouchers………………………………………………………..……… 829.80
c. P 22,000 Advances to employees……………………………………….…………………. 200.00
d. P 42,000 IOU from employees……………………………………………………………… 300.00
8. On December 31, 2015, Cignal HD had the following cash balances: In the entry to replenish the fund, what amount should be debited to the cash short or over account?
Cash in bank……………………………………………………………………. P a. P 13.60
1,800,000 b. P 300.00
Petty cash fund (all funds were reimbursed on 12/31/15)…………………. c. P 500.00
50,000
d. P 0
Time deposit (due February 1, 2016)…………………………………………
250,000 11. Stark Industry’s accountant is preparing its October bank reconciliation and has collected the following
Cash in bank included P600,000 of compensating balance against short-term borrowing arrangement data:
on 12/31/15. The compensating balance is legally restrictedas to withdrawal. On December 31, 2015, Per Books
what is the amount that is to be reported as cash and cash equivalents? Per
a. P 2,100,000 Bank
b. P 1,950,000 Oct. 1 balance…………………………………………………. P11600
c. P 1,500,000 P10,000
d. P 1,250,000 Oct. deposits…………………………………………………… 24,600
9. New San Jose Builders Inc. reported petty cash fund which comprised the following: 21,200
Coins and currencies…………………………………………………….......... P Oct. checks……………………………………………………. 27,800
29,000
3,300
Note Collected (plus 10% interest)…………………………. 0
Paid vouchers 4,400
Transportation…………………………………………………………. 600 Oct. service charge…………………………………………… 0 20
Gasoline……………………………………………………………….. 400 Oct. 31 balance……………………………….………………. 8,400
Office supplies………………………………………………………… 500 6,580
Postage stamps………………………………………………………. 300 Additionally, deposits in transit and outstanding checks from September reconciliation were P4,400 and
P2,800, respectively.
Due from employees………………………………………………….
The correct cash balance at October 31 should be:
1,200 3,000 a. P10,960
NSF managers check………………………………………………………….. b. P12,780
1,000 c. P11,180
d. P 3,980

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12. Fédération Internationale de Volleyball provided the following information in preparing the August 31, Customers NSF check listed in the bank statement………………………………… P
2015 bank reconciliation: 40,800
Balance per bank statement…………………………………………………... P Bank service charge……………………………………………………………………..
1,805,000 2,400
Deposit in transit………………………………………………………………… Outstanding check……………………………………………………………………….
325,000 178,000
NSF customer check…………………………………………………………… Deposit of 45,000 was erroneously credited in the bank statement as.................
60,000 54,000
Outstanding checks…………………………………………………………….. Company wrote 1,700 but recorded it as……………………………………………..
275,000 7,100
Bank service charge for August………………………………………………. Customer default on account…………………………………………………………..
10,000 12,600
On August 31, 2015, how much is the adjusted cash balance? The correct cash balance should be:
a. P 1,855,000 a. P 572,400
b. P 1,795,000 b. P 490,800
c. P 1,785,000 c. P 581,400
d. P 1,755,000 d. P 561,600
13. FIBA prepared the following bank reconciliation on December 31, 2015: 15. Samsung Inc. uses four-column bank reconciliation. The bank reconciliation for March shows
Balance per bank statement…………………………………………………… P outstanding checks for P300. During April, the company wrote check totaling P23,600. The bank
2,800,000 statement for April shows P23,010 of checks clearing the company’s account. The amount of
Add: Deposit in transit………………………………………………………. outstanding checks on April bank reconciliation must be:
195,000 a. P 890
Checkbook printing charge…………………………………………… b. P 600
5,000 c. P 300
Error made in recording check no. 45 last December…………….. d. P 1,200
35,000 16. Nitendo Co. reported a balance of P14,300 in its cash account at the end of the month. There were
NSF check……………………………………………………………… P12,000 deposits in transit and P11,500 of checks outstanding. The bank statement showed a balance
110,000 of P15,000. Service charge of P600, and the collection of a note plus interest. The note had a face value
Less: Outstanding checks…………………………………………………… of P1500. How much interest did the company collect?
100,000 a. P 1,800
Note collected by bank……………………………………………….. b. P 300
215,000 c. P 2,400
Balance per book……………………………………………………………….. P d. P 1,200
2,830,000 17. Sony uses four-column bank reconciliation. The bank statement for May shows payments of P13,150,
The entity had P200,000 cash on hand on 12/31/15. How much should be reported as cash in the including service charge of P200. At the beginning of May, there were P900 of checks outstanding. At
statement of financial position? the end of May, there were P1,200 of checks outstanding. Before recording the bank service charge,
a. P 2,930,000 Sony must have recorded May payments of:
b. P 3,095,000 a. P13,250
c. P 2,895,000 b. P12,650
d. P 3,130,000 c. P13,050
d. P13,650
14. When a company’s bookkeeper started to prepare the monthly bank reconciliation, the cash account 18. A company received its monthly bank statement, which showed an ending balance of P150,000.
showed a balance of P528,600. At the end of the month, the following information was available from Adjustment on the bank reconciliation included a deposit in transit of P20,000; outstanding checks of
the company records and the monthly bank statement:

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P30,000; NSF check of P5,000; bank service charge of P300; proceeds of a note collected by the bank
of P40,000. What was the correct cash balance to be shown in the statement of financial position?
a. P134,700
b. P105,300
c. P140,000
d. P174,700
19. Using the same information in no. 18, how much is the unadjusted cash balance per books?
a. P134,700
b. P105,300
c. P140,000
d. P174,700
20. GIC Enterprise’s cash account had a balance of P96,200 on August 31. This included a bank deposit of
P8,700 that was in transit on the 31 st. The August 31 bank statement contained the following
information:
Bank statement balance……….. P 108,900 NSF
check……………………… P 1,600
Bank service charge……………. 1,700 Collection of
note………………. 8,600
GIC also had an outstanding check of P16,100. What is GIC’s reconciled balance?
a. P92,900
b. P96,200
c. P104,700
d. P101,500

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