REVIEWER: CFAS: QUIZ BASED recorded by the depositor as cash

disbursements. The following are

1. In accounting parlance, cash includes examples of debit memos, except
a) Money and any negotiable instrument a) note collected by bank in favor of the
that is payable in money and depositor
acceptable by the bank for deposit 12. Bank statements provide information
and immediate credit about all of the following, except
2. One of the requisites of cash and cash a) errors made by the company.
equivalents is: 13. Statement 1 The balance of the petty cash
a) Unrestricted in use for current fund should be reported in the statement
operations of financial position as a long term
3. Which of the following is not considered as investment. Statement 2 The
cash and cash equivalents? reimbursement of the petty cash fund
a) Equity investments should be credited to the cash account
4. All of the following could be used as a tool a) Statement 2 is true
in measuring cash and cash equivalents 14. A cash short and over account is
except: a) Debited when the petty cash fund
a) Cash equivalents should be measured proves out short
at maturity value, meaning face value 15. Bank reconciliation are normally prepared
plus interest on a monthly basis to identify adjustments
5. Statement 1 Cash is an item that must be needed in the depositor’s records and to
restricted is use. Statement 2 "Funds" (as identify bank errors. Adjustments on the
in "flow of funds") always means cash and part of the depositor should be recorded
near-cash equivalents for
a) Neither of the statement is true a) All items except bank errors,
6. Which of the following is a characteristic of outstanding checks and deposits in
bank overdraft? transit.
a) Which cannot be offset is classified as 16. The petty cash fund account under the
a current liability imprest fund system is debited
7. Unreleased checks (checks drawn before a) Only when the fund is created
the end of reporting period but held for 17. In preparing a bank reconciliation, interest
later delivery to creditors) paid by the bank on the depositor’s
a) Shall be restored to the cash balance account is
8. An investment or security is considered a) added to the book balance
cash equivalents if it is 18. Which item should be excluded from cash
a) Short-term and highly liquid and cash equivalents in the current year-
investments that are readily end statement of financial position?
convertible into cash and acquired a) Time deposit which matures in one
three months before maturity year
9. Statement 1: An entity shall classify an 19. Which of the following is usually
asset as current when the asset is cash or a considered cash?
cash equivalent unless it is restricted to a) Checking account
settle a liability for more than 12 months 20. If the cash balance shown in the
after the end of the reporting period. company’s cash records is less than the
Statement 2: Postdated checks receive can correct cash balance and neither the
be considered as cash company nor the bank has made any
a) Neither of the statement is true errors, there must be
Note: Statement 2 is true a) an interest credited by the bank in the
10. Which of the following describes the depositor’s account
nature of a compensating balance? 21. A bank reconciliation is
a) Which is legally restricted and related a) A schedule that accounts for the
to a short-term loan is classified difference between an entity’s cash
separately as a current asset balance as shown in the bank
11. Debit memos refer to items not statement and the cash balance
representing checks paid by the bank shown in the general ledger.
which are charged or debited by the bank
to the account of the depositor but not yet
22. A compensating balance 31. Statement 1: An overdraft in the bank
a) Which is legally restricted and related statement is included in the balance sheet
to a short-term loan is classified as a current asset. Statement 2: If the bank
separately as current asset. reconciliation starts with a debit balance
23. Which of the following statements is not from the Bank account in the Cash book
true? the bank charges appearing in the Bank
a) The petty cash account is debited statement would be added.
when the fund is replenished. a) Neither of the statement is true
24. Following are reconciling items in an 32. If the cash balance shown in a company's
enterprise’s bank reconciliation statement. accounting records is less than the correct
I. Deposits in transit cash balance, and neither the company nor
II. Company check for P32,500 recorded in the bank has made any errors, there must
the books for P23,500 be
Ill. Note collected by bank in behalf of the a) deposits credited by the bank but not
company yet recorded by the company.
IV. Deposit of another company 33. The journal entries for a bank
erroneously credited by bank to the reconciliation
company’s account a) may include a debit to Office Expense
V. No sufficient fund check charged back for bank service charges
by bank 34. If the balance shown on a company's bank
VI. Company deposit for P32,500 recorded statement is less than the correct cash
in the books for P23,500 Which of these balance, and neither the company nor the
adjustments would be shown as addition bank has made any errors, there must be
to the cash balance per books in order to a) deposits in transit.
arrive at the correct cash balance? 35. Which of the following is not true with
a) III and VI regards to window dressing?
25. What is the major purpose of an imprest a) Window dressing is a practice of
petty cash fund? misappropriating a collection from
a) To effectively control cash one customer and concealing this
disbursements defalcation by applying a subsequent
26. Unreleased checks (check drawn before collection made from another
the end of reporting period but held for customer
later delivery to creditors) 36. Which of the following is not true with
a) Shall be restored to the cash balance. regards with kiting?
27. Which is FALSE concerning measurement a) Kiting is a practice occurred through
of cash and cash equivalents? recording transactions as of the last
a) Cash equivalents should be measured day of the reporting period payments
at maturity value, meaning face value of accounts made subsequent to the
plus interest. close period
28. At the end of the current year an entity 37. Statement 1: Bank Reconciliation
received various checks and papers in its Statement is a statement prepared by a
safe. Which item should not be included in bank. Statement 2: Cheques deposited in
'cash' in the current year-end statement of to bank are recorded on debit side of the
financial position? bank column of Cash book.
a) Past due promissory note issued in a) Statement 2 is true
favour if the entity by the President 38. Which of the following is not true with
29. Statement 1: A debit balance in Bank regards with lapping?
account in the Cash book appears as a a) Lapping involves opening the books of
credit balance in the Bank statement. accounts beyond the close of the
Statement 2: A Bank reconciliation reporting period for the purpose of
statement is not part of the double entry showing a better financial position
system. and performance.
a) Statement 1 is true 39. When preparing a bank reconciliation,
30. How errors are recorded on bank bank credits are
reconciliation? a) added to the balance per books.
a) None of the above 40. Statement 1: Savings account is an account
where a passbook is required in making
 deposits and withdrawals. Statement 2:
Savings account is an account where a
passbook is required in making deposits
and withdrawals
a) Both statements are true
41. Which of the following is false?
a) A certified check is one drawn by a
bank upon itself.
42. Which of the following is an appropriate
reconciling item to the balance per bank in
a bank reconciliation?
a) Deposit in transit