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Cash and Cash Eq
Cash and Cash Eq
Cash and Cash Eq
BCSV
I. THEORIES.
A. Multiple Choices. Choose the letter of the best answer.
1. Which of the following shall not be considered cash for financial reporting purposes?
A. Petty cash fund and change funds
B. Money orders, certified checks and personal checks
C. Coins, currencies and available funds
D. IOUs
5. If material, deposits in foreign bank which are subject to foreign exchange restriction
shall be classified
A. Separately as current asset, with appropriate disclosure.
B. Separately as noncurrent asset with appropriate disclosure.
C. Be written off as an extraordinary loss
D. As part of cash and cash equivalents.
6. A compensating balance
A. Must be included in cash and cash equivalent.
B. Which is legally restricted and related to a long term loan is classified as current
asset.
C. Which is legally restricted and related to a short-term loan is classified separately
as current asset
D. Which is not legally restricted as to withdrawal is classified separately as current
asset.
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12. At the end of the current year, an entity had various checks and papers in its safe.
Which item should not be included in its cash account in the current year-end
statement of financial position?
A. US $ 15,500 cash
B. Past due promissory note issued in favor of the entity by its president
C. Another entity’s P 160,000 check payable to the entity dated Dec. 15 of the
current year
D. The entity’s undelivered check payable to a supplier dated Dec. 31 of the current
year.
14. Which of the following must be deducted from the bank statement balance in
preparing a bank reconciliation which ends with adjusted cash balance?
A. Deposits in transit
B. Outstanding checks
C. Reduction of loan charged to the account of the depositor
D. Certified check
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18. Unadjusted book balance of cash is less than the correct cash balance of cash due to
the following except
a. Proceeds of note collected by the bank
b. A customer’s check for P540 was recorded by the depositor in the cash
receipts book as P450
c. A check issued to a supplier on account for P760 was recorded in the cash
disbursements book as P670
d. Interest earned
19. Unadjusted bank balance of cash is more than the correct cash balance of cash due
to the following except?
a. Deposit in transit
b. Outstanding checks
c. Erroneous bank credit
d. A customer’s deposit for P450 was recorded by the bank as P540
20. Seldom does the book balance of cash is in agreement with the bank balance of cash
due to any of the following except
a. Deposit in transit
b. Outstanding checks
c. Bank charges and credits recognized by the bank during the month
d. Bank secrecy requirements
21. The person responsible, at all times, for the amount of the petty cash fund is the
A. Chairman of the Board of Directors
B. President of the company
C. Petty cash custodian
D. General cashier
22. The following are appropriate procedures for controlling the petty cash fund, except
A. To monitor variations in different types of expenditures, the petty cash custodian
files petty cash vouchers by category of expenditure after replenishing the fund
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B. To replenish the fund, the general cashier issues a company check to the petty
cash custodian, rather than cash.
C. To determine that the fund is being accounted for satisfactorily, surprise counts of
the fund are made from time to time by the internal auditor or other responsible
official.
D. Each individual to whom petty cash is paid is required to present signed receipts
to the petty cash custodian
24. What is the effect of not replenishing the petty cash at year-end and not making the
appropriate adjusting entry?
A. A detailed audit is essential
B. The petty cash custodian should turn over the petty cash to the general cashier
C. Cash will be overstated and expenses understated
D. Expenses will be overstated and cash will be understated
A. Your audit of the December 31, 2013, financial statements of Steel Corp. reveals the
following:
1. What amount should be reported as cash and cash equivalents in the Dec.
31,2013 statement of financial position?
B. The cash account in the current asset section of the balance sheet for AA Co. showed
a balance of P555,000. It was found to include the following items:
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C. The chief accountant of Clock Dairy’s Co. is determining the amount of cash and cash
equivalents to be reported on its December 31, 2013 statement of financial position.
She found out that the Cash and Cash Equivalents balance in the general ledger was
composed of the following items.
A customer’s check on hand dated January 10, 2014 for P320,000. The check was
recorded as collected in December and was included in the savings account with
Chinabank.
A check for P300,000 was issued to a supplier on December 29, 2013 and drawn from
Chinabank account. The check was dated Jan. 8, 2014 and was traced to have been
entered in the Dec. check register.
Clock Dairy maintains a P5,000,000 cash balance at all time at Allied Bank to ensure
future credit availability.
A check for P50,000 for adjustment in salaries of an employee for the month of
November was still on hand at Dec. 31, 2013. The check was verified to have been
recorded in the cash disbursement journal in December.
D. Mars Company’s checkbook balance at Dec. 31, 2011 was P50,000. In addition, Mars
held the following items in its safe on that date.
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E. The statement of financial position of Imation Company shows cash of P860,000. The
following items were found to comprise the total amount:
5,000
Travel advances
250,000
Savings account restricted for the payment of long term obligations P860,000
Total:
F. Hai – Co is reviewing the cash accounting for Hei – Co. Hai – Co’s review will focus on
the petty cash fund account and the bank reconciliation for the month ended June 30,
2013. She has collected the following information from Hei – Co’s bookkeeper for this
task.
1. The petty cash fund was established on June 3, in the amount of P 10,000
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2. Expenditures from the fund by the custodian as of June 30, 2013, were evidenced by
approved petty cash vouchers for the following:
Office supplies P 3,920
IOUs from employees 1,200
Shipping charges 2,298
Other expenses 1,526
On June 30, the petty cash fund was replenished and increased to P 12,000; currency and
coins in the fund at that time totaled P 756.
Bank reconciliation
Deposits in transit are determined to be P 120,000 and checks outstanding at June 30 total P
34,000. Cash on hand (except petty cash) at June 30 is P 9,840.
G. The auditor for Glaives Co. examined the petty cash fund immediately after the close
of business, July 31, 2013, the end of company’s natural business year. The petty
cash custodian presented the following during the count:
Currency P 1,650
Petty cash voucher:
Postage 420
Office supplies 900
Transportation 340
Repairs & maintenance 800
Advances to office staff 1,500
A check drawn by Glaives, payable to the
petty cash custodian 7,200
Postage stamps 300
An employee check, returned by bank,
marked NSF 1,000
An envelope containing currency for a gift for
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The general ledger shows an imprest petty cash fund balance of P 16,000.
H. The following information is included in Wisdom Corp.’s bank statement for the
month of April:
In comparing the bank statement to the company’s cash records, you found:
The deposits in transit and outstanding checks have been correctly taken up in the
company’s books. You also found a customer’s check for P 17,400 that had not yet been
deposited and had not been recorded in Wisdom’s books. Your client’s book show a cash
balance of P 36,420.
I. A company is reconciling its bank statement with internal records. The cash balance
per the company’s books is P 45,000. There are P 5,000 of bank charges not yet
recorded, P 7,500 of outstanding checks, P12,500 of deposits in transit, and P15,000
of bank credits and collections not yet taken up in the company’s books.
Dec. 31 Jan. 1
Cash ? P 186,000
Accounts receivable 273,000 201,000
Merchandise inventory 234,000 258,000
Accounts payable 144,000 159,000
Total sales and cost of sales for 2013 were P 2,394,000 and P 1,749,000, respectively. All
sales and purchases were made on credit. Various operating expenses of P 321,000 were
paid in cash. Assume that there were no other pertinent transactions. Compute for the…
K. Yohoy Co., keeps all its cash in checking account. An examination of the company’s
accounting records and bank statement for the month ended Dec. 31, 2014 revealed
the following information:
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A deposit of P 9,500 through the bank’s night depository box on Dec. 29 did not appear on
the bank statement. The bank statement shows that on Dec. 28, 2014, the bank collected a
note for Yohoy and credited the proceeds of P 9,350 to the company’s account. The proceeds
include P350 interest, all of which Yohoy earned during the current accounting period. Yohoy
has not yet recorded the collection.
Yohoy discovered that check # 230, written in Dec. 2014 for P 1,830 in payment to a
supplier, had been recorded in the company’s records as P 1,380.
Included with the Dec. 31, 2014 bank statement was an NSF check for P 2,500 that
Yohoy had received from Cu Co. on account on Dec. 19. Yohoy has not yet recorded
the returned check. The bank statement shows a P 150 service charge for December.
L. Judith Mae Borda Corp. misplaced all the bank statements for the past years. You
reviewed the accounting records and discovered that the following journal entries
were made to reconcile the June 30, 2012 bank records and accounting records.
21.What is the balance of the cash account per bank statement as of June 30,
2012?
M. The following data pertaining to the cash transactions and bank accounts of O’rayt
Co. for July 2011 are as follows:
Debit memo for printed checks delivered by the bank; the charge has not been recorded in
the accounting records, P 225.
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Proceeds of a bank loan on July 31 not recorded in the accounting records, net of P 300
interest, P5,700.
Proceeds from customer’s promissory note, principal amount, P8,000, collected by the bank,
not taken up in the books, with P100 interest, P8,100.
Check # 2000 payable to a supplier entered in the accounting records as P 2,100 deducted
in the bank statement the erroneous amount of P 1,200.
Stolen check lacking an authorized signature deducted from O’rayt’s account by the bank in
error, P800.
Customers check returned by the bank marked DAIF, indicating that the customer’s balance
was not adequate to cover the check. No entry has been made in the accounting records to
record the returned check, P760.
N. In comparing the balance per books of Maguindanao Company with the bank
statement obtained from the bank, together with the canceled checks and other
memoranda at Dec. 31, 2013, you observed the following:
f) Proceeds of bank loan, 12/15/13 omitted from company’s records, net of P 3,000
charge, P 97,000
g) Deposit of 12/23/13 omitted from the bank statement, P 28,924.10
h) Check of Italy products charged back on 12/22/13 for lack of counter signature,
redeposited on 1/5/14. No entry was made for the charge back or the redeposit. P
8,737.40
k) Proceeds of note of B. Christian & Co. collected by bank on 12/1/13 not entered on
books, inclusive of P 400 interest and net of service charge of P50. P 20,350.
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Entered as P 48,171.00
Correct amount, 48,071.00
23.Determine the correct cash balance of Maguindanao Co. at Dec. 31, 2013.
The following information were gathered at year-end that pertains to the above:
a. Included among the checks drawn against Security Bank general account during
December and recorded also in December are:
Check # 3144 written for P12,500 payable to ABC Trading was delivered on
January 5, 2013
Check # 4220 written for P24,000 payable to Dac Trading was certified by the
bank but this check remained outstanding at reporting date.
Check # 8603 written for p7,500 payable to Roshan Trading dated January 26,
2013
Included among the December receipts recorded in the Security Bank general
account are as follows:
Customers checks for P15,000 dated January 30, 2013
Customers check for P25,000 dated December 14, 2012 but returned by the
bank due to insufficiency of fund
Money orders for P1,000
Travelers’ check for $2,000 converted to peso value of P84,000
b. The company has an overdraft line with Security Bank hence the right of offset exists.
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P. The trial balance of Reyes Co. at Dec. 31, 2013 includes the following accounts:
a. The petty cash fund consisted the following items as of Dec. 31, 2013:
Currency and coins, P 1,490
Employees’ advances, with no supporting vouchers, P880
Currency in an envelope marked “collections for charity” with employees’
name attached, P 160
Unreplenished petty cash vouchers, P 740
Replenishment check drawn by Reyes payable to the petty cashier, P1,830
e. The savings account deposit in Security bank was a fund set aside by the Board of
directors for the acquisition of new machine. The company expects to disburse this
amount on Jan. 2, 2014.
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Q. The bank statement of Appetite Corp. for April, 2013 showed an ending balance of
P169,263. Deposit in transit on Apr. 30 was P18,200. Outstanding checks as of Apr.
30 were P59,435. During the month of April, the bank charged back NSF checks in
the amount of P3,435 of which P 1,835 had been redeposited by Apr. 30. The
company made no entry for the return and for the redeposit of the checks.
On Apr. 23, the bank charged Appetite Corp.’s account for a P2,200 item which
should have been charged against the account of Ammetite Corp.; the error was not
detected by the bank. During April, the proceeds from notes collected by the bank for
Appetite Corp. were P7,548 and bank charges for this service were P180.
R. On July 5, 2013, Smee Corp. received its bank statement for the month ending June
30. The statement showed a P209,500 balance while the cash account balance on
June 30 was P35,000. In reconciling the balances, the auditor discovered that:
1. The June 30 collections of P176,000 were recorded on the books but were not
deposited until July.
2. The bank service charges for the month of June totaled P3,000
3. A paid check for P24,300 was entered incorrectly in the cash payments journal as
P34,200.
S. The bank statement for the current account of sir George James Corp. showed a Dec.
31, 2013, balance of P585,284. Information that might be useful in preparing a bank
reconciliation is as follows:
b) The Dec. 31, 2013, cash receipts of P23,000 were not deposited in the bank until Jan.
4, 2014.
c) One check written in payment of rent P8,940 was correctly recorded by the bank but
was recorded by sir George as a P9,840 disbursement.
d) In accordance with prior authorization, the bank withdrew P18,000 directly from the
current account as payment on a mortgage note payable. The interest portion of that
payment was P14,000. Sir George has made no entry to record the automatic
payment.
f) A deposit of P35,000 was recorded by the bank on Dec. 13, but it did not belong to sir
George James.
g) The bank statement included a charge of P3,400 for an NSF check. The company will
seek payment from the customer.
h) Sir George maintains an P8,000 petty cash fund that was appropriately reimbursed at
the end of December.
i) According to instructions from sir George on Dec. 29, the bank withdrew P400,000
from the account and purchased treasury bills for sir George. The company recorded
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the transaction in its books on Dec. 31 when it received notice from the bank. Half of
the treasury bills mature in three months and the other half in four months.
Compute for:
33.The cash in bank balance per books on Dec. 31, 2013.
34.The adjusted cash in bank balance on Dec. 31, 2013.
35.The amount to be reported as cash and cash equivalents on its Dec. 31,
2013 statement of financial position.
T. EMA Co. was organized on Jan. 13, 2011. The following items are from the company’s
trial balance on December 31, 2011.
Compute for
36.The total collections from sales
37.The total payments for merchandise purchases
38.The total cash receipts per books
39.The total cash disbursements per books
40.The cash balance per books on Dec. 31
41.The adjusted cash balance on Dec. 31
U. Your audit of the cash account of CG corp. disclosed the following information:
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Compute for
42.The principal amount of the note collected by bank in December.
43.The adjusted cash in bank balance at Dec. 31, 2013.
44.The cost of checkbook
45.The amount of petty cash shortage at Dec. 31, 2013
46.The adjusted petty cash balance
V. HJE Co, organized on Apr. 3, 2013, has a very poor internal control system. The
company’s cashier is also its accountant. After 8 months of operations, the
company’s manager suspects that the cashier-accountant has been misappropriating
company collections. You have been engaged to audit the company’s accounts to
determine the extent of fraud, if any.
You started the audit on Nov. 15. On that date, the cash on hand per surprise count
was P5,140. Also on that date, the bank confirmed that the balance of the company’s
current account was P26,328. You also obtained the information that the cashier’s
accountability is P151,228. Your examination of the records reveals that a check for
P1,852 was outstanding on Nov. 15, the company’s mark up is 40% of sales.
Further examination of the company’s records reveals the following balances at Nov.
15, 2013:
Ordinary share capital P300,000
Share premium 20,000
Real property purchased for cash 200,000
Mortgage payable 80,000
Furniture and fixtures (of the acquisition cost, P6,000
remains unpaid as of Nov. 15) 29,000
Notes payable – BPI 32,000
Accounts payable – trade 46,284
Expenses paid (excluding purchases) 60,756
M. inventory at cost 93,920
Accounts receivable – trade 85,380
Total sales 340,000
Compute for
47.The amount paid for inventory purchases
48.The collections from customers
49.The adjusted bank balance as of Nov. 15, 2013
50.The cash shortage as of Nov. 15, 2013
W. In auditing the VO Co., you obtained the bank statement, canceled checks and other
memoranda which relate to the company’s bank account for December 2013. In
reconciling the bank balance with that shown on the company’s books, you observed
the facts set forth below:
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6. Proceeds of bank loan, 12/6/13, discounted for 3 months at 18% per annum,
omitted from company books P47,750
11. Proceeds of note of QR Co, collected by bank, 12/14/13, not entered in cash book
(principal amount of P25,000 plus interest of P1,125, less collection fee) P25,625
12. Erroneous debit memo of 12/30/12, to charge company’s account with settlement
of bank loan which was paid by check # 11002 on same date P5,000
Compute for
51.The principal amount of the loan obtained from bank in December
52.The amount of collection fee
53.The adjusted cash in bank balance as of Dec. 31, 2013
54.The net adjustment in cash in bank per ledger as of Dec. 31, 2013
~END OF ACC 1A&B~
“For the things we have to learn before we can do them, we learn by doing
them.”
~ Aristotle
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