As of December 31, 20x1, the petty cash fund of Princess Company with a general ledger balance of

P15,000 comprises the following:

Coins and currencies                                                                P 2,550
Petty cash vouchers:
Gasoline for delivery equipment                                             P3,000
Medical supplies for employees                                                2,040     5,040
IOU’s:
Advances to employees                                                                          2,220
A sheet of paper with names of several employees
   together with contribution to bereaved employee,
   attached is a currency of                                                                      2,400
Checks:
Check drawn to the order of the petty cash custodian                       3,000
Personal check drawn by the petty cash custodian                             2,400
 
The entry to record the replenishment of the petty cash fund includes
Dec 31    Gasoline for delivery equipment                 3000
                Medical Supplies for employees                   2040
               Advance to employees                                2220
               Cash over or short                                         2190  
                           Cash in Bank                                                   9450  

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On January 1, 2002, Princess Corporation established a petty cash fund of ₱400. On December 31,
2002, the petty cash fund was examined and found to have receipts and documents for miscellaneous
expenses amounting to ₱364. In addition, there was cash amounting to ₱44. What entry would be
required to record replenishment of the petty cash fund on December 31, 2002?

Dec 31        Expenses                       400

                                 Petty Cash Fund            400

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Information has the quality of relevance when

I.      It influences the economic decisions of users by helping them evaluate past, present, or future
events or confirming, or correcting their past evaluations.
II.     It is free from material error and bias and can be depended upon by users to represent faithfully
that which it purports to represent or could reasonably be expected to represent.
A.    I only.             C.    I and II.
B.     II only.            D.    Neither I nor II.

B
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"Petty Cash fund" account can be seen on the face of financial statements.
Select one:
True
False

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 The principal purpose of a voucher system is to provide assurance that

a. all cash receipts are deposited intact in the bank.

b. all cash disbursements are approved before a check is issued.
c. all cash receipts are recorded in the accounting records.
d. all purchase invoices are supported by debit memoranda.

b
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This represents the concepts that underlie the preparation and presentation of financial statements.
A.    Statement of Financial Accounting Standards
B.    Statement of Auditing Standards
C.    Note to financial statements
D.    Conceptual framework

D
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On December 31, 2009, Princess Company had the following cash balances:
 Cash in banks                                                                                       P1,800,000
Petty cash funds (all funds were reimbursed on 12/31/09)                    50,000
 Cash in banks includes P600,000 of compensating balances against short-term borrowing
arrangements at December 31, 2009. The compensating balances are not legally restricted as to
withdrawal by West. In the current assets section of West's December 31, 2009, balance sheet
(statement of financial position), what total amount should be reported as cash?

Answer:

Question 8
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Decision makers vary widely in the types of decisions they make, the methods of decision making
they employ, the information they already possess or can obtain from other sources, and their ability
to process information. Consequently, for information to be useful there must be a linkage between
these users and the decisions they make. This link is
A.    Relevance                                                        C.    Understandability
B.    Reliability                                                          D.    Materiality

C
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Question 9
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What is the proper accounting treatment for a stale check?

a. Revert back to cash and accounts payable.

 b. Revert back to cash and a credit to gain.
c. Ignored
d. Either a or b

d
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Question 10
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Princess Company’s petty cash custodian has the following in its cash box: 
Bills and Coins: P 520 
Petty Cash Vouchers: P 1,700 
Postdated Checks from Company Officers: P 1,000 
IOUs from employees (vale): P 500 
An envelope which has a “Happy Birthday” on it. It has a “P 350” writing at the back It was left
unopened.
The Petty Cash is established at P3,500. 
It is already reporting date and no replenishment has been done.

Provide the adjusting entry.

Dec 31   Expenses                                                1700

              Receivable from Officers                      1000
             Advances to employees                       500
             Cash Short or Over                                  130
                              Petty cash Fund                                         3330

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The valuation of a promise to receive cash in the future at present value on the financial statement of
a business entity is valid because of the accounting concept of
A.    Entity                                                                  C.    Going concern
B.    Time period                                                      D.    Monetary unit

C
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Question 12
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The FRSC Framework

A.    Sets out the concepts that underlie the preparation and presentation of financial statements for
external users.
B.    Provides information about the financial position, performance and changes in financial position
of an enterprise that is useful to a wide range of users in making economic decisions.
C.    Represents the attributes that make the information provided in financial statements useful to
users.
D.    Is directly related to the measurement of financial position and performance of an enterprise

A
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In analyzing a company’s financial statements which financial statement would a potential investor
primarily use to assess the company’s liquidity and financial flexibility?
A.    Balance sheet                                                  C.    Statement of retained earnings
B.    Income statement                                            D.    Cash flow statement

A
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Financial accounting is concerned with

A.    General-purpose reports on financial position and results of operations.
B.    Specialized reports for inventory management and control.
C.    Specialized reports for income tax computation and recognition.
D.    General-purpose reports on changes in stock prices and future estimates of market position.

A
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Question 15
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Cash equivalents are considered as part of cash.

Select one:
True
 False

Question 16
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Financial statements (choose the statement that is not valid)

A.    Provide information about the financial position, financial performance and cash flows of an
enterprise that is useful to a wide range of users in making economic decisions.
B.    Are the primary responsibility of the management of the enterprise.
C.    Also show the results of the stewardship of management for the resources entrusted to it.
D.    Are prepared and presented at least annually and are directed toward the specific information
needs of a wide range of users.

C
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The amount reported as "Cash" on a company's statement of financial position normally should
exclude

a. postdated checks that are payable to the company.

b. cash in a payroll account.
c. undelivered checks written and signed by the company.
d. petty cash.
 d
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The cash account in the current asset section of the balance sheet for Princess Company showed the
balance of P555,000. It was found to include the following items:
 Petty cash fund (P1,000 is in the form of paid vouchers) P5,000
 Undeposited receipts (including post-dated check for P5,000), P120,000
 Currencies and coins awaiting deposit, P55,000
 Bond sinking fund – cash (expected to be disbursed next year), P100,000
 Check drawn by manager-returned by bank marked NSF, P20,000
 
 What is the correct cash balance for Princess Company’s balance sheet?

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Which of the following statements about materiality is not correct?

A.    An item must make a difference or it need not be disclosed.
B.    Materiality is a matter of relative size or importance.
C.    An item is material if its inclusion or omission would influence or change the judgment of a
reasonable person.
D.    All of these are correct statements about materiality
 D
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Question 20
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Petty Cash fund should be replenished every end of the year.

Select one:
True
False

Question 21
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The providers of risk capital and their advisers

A. Are concerned with the risk inherent in and return provided by their investments and need
information to help determine whether they should buy or sell.
B. Are interested in information about the stability and profitability of the employers.
C. Are interested in information that enables them to determine whether their moans and the interest
attaching to them will be aid when due.
D. Have an interest in information about the continuance of an enterprise, especially when they have
a long-term involvement with or are dependent on the enterprise.
A
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Which statement is correct concerning the ASC framework?

I.      The framework applies to the financial statements of all commercial, industrial and business
reporting enterprises, whether in the public and private sector                                                               
II.     Special purpose financial reports, for example, prospectuses and computations prepared for
taxation purposes, are beyond the scope of the framework                                                                     
A.    Both I and II                                                       C.    I only
B.    Neither I nor II                                                   D.    II only

C
Answer: