Professional Documents
Culture Documents
Prelims
Prelims
Prelims
o Faithful Representation
o Materiality
o Completeness
o Neutrality
o Free from Error
14. The underlying theme of the Conceptual Framework is
o Decision usefulness
o Understandability
o Timeliness
o Comparability
15. It is the goal achieved by consistency.
o Conservatism
o Comparability
o Verifiability
o Timeliness
o Understandability
16. These are the attributes that make the information provided in financial statements
useful to users.
o Qualitative characteristics
o Generally accepted accounting principles
o Underlying assumptions
o Accounting constraints
17. It is the ability to bring together for the purpose of noting points of likeness and difference.
o Understandability
o Comparability
o Verifiability
o Timeliness
18. Angel is preparing the financial statements for her company, TGR Corporation. One of
the transactions during the year was a complex finance deal involving bonds. Tanya is
of the opinion that, because the majority of financial statements users won’t
understand the transaction, she should leave it off the balance sheet. Is Tanya’s
decision correct?
o Yes
o No
o Maybe
o Not Relevant
19. Preparers of statements should not try to increase the usefulness of the information to a few
users to the detriment of others who may have opposing interests.
o Completeness
o Faithful Representation
o Free from Error
o Substance over Form
20. Financial accounting is the area of accounting that emphasizes reporting to
o Management
o regulatory bodies
o internal auditors
o creditors and investors
21. Small expenditures for tools are expensed immediately.
o Relevance
o Faithful Representation
o Materiality
o Completeness
22. Which of the following elements of financial statements is not associated with
the statements of financial position?
o Income
o Equity
o Liability
o Asset
Cash and Cash Equivalents
1. Compute the correct amount of “Cash” to be shown as current assets on the December 31,
2019 balance sheet of Covid Company considering the following additional details: (1) The cash
account in Covid Company’s ledger showed a balance at December 31, 2019 of P13,697,000;
(2) Cash in Valenzuela Bank includes P700,000 of compensating balance against short-term
borrowing arrangement at December 31, 2019. The compensating balance is legally
restricted as to withdrawal by Covid Co; (3) Cash in bank – Bulacan Bank is net of a P20,000
check dated January 10, 2020 in payment of accounts payable, mailed on December 29, 2019.
o P1,215,000
o P11,225,000
o P1,235,000
P1,245,000
2. A company established a P1,000 petty cash fund by issuing a check to the custodian
(petty cashier) on October 1. On October 15, the petty cash fund was replenished and
increased to P1,250 in total. The contents of the petty cash fund at the time of the
October 15 replenishment were:
ANSWER: 109
3. Covid Company has cash in bank of P10,000, restricted cash in a separate account of
P3,000, and a bank overdraft in an account at another bank of P1,000. Covid Company
should report cash of*
o P10,000
o P12,000
o P9,000
o P13,000.
4. Consider the following: Cash in Bank - checking account of P13,500, Cash on hand of P 500,
Post-dated checks received totaling P3,500, and certificates of time deposit totaling P124,000.
How much should be reported as cash in the statement of financial position?
o P17,500
o P14,000
o P13,500
o P131,500.
5. Compute the amount to be reported as Cash and Cash equivalents:
o P1,201,500
o P1,210,000
o P3,201,500
o P1,206,500
6. Compute the amount to be reported for Cash and Cash Equivalents assuming Covid
Company had a checkbook balance on Dec 31, 2019 of P8M and held the following items
in the safe:
Covid Company provided the following information at year-end:
ANSWER: 12,940,000
7. Covid Company has the following items at year-end: Cash in bank P20,000; Petty cash 300,
Commercial paper with maturity of 2 months 5,500; Post-dated checks 1,400. Covid Company
should report cash and cash equivalents of:
o P20,000.
o P20,300.
o P25,800
o P27,200.
ANSWER: 1,775,000
9. Covid Company had a petty cash fund which included the following details:
ANSWER: 6,000
10. Covid Company had the following balances on Dec 31, 2019:
● 2,250,000
● 3,975,000
● 2,370,000
● 1,770,000
11. In preparing its May 31, 2019 bank reconciliation, Glissa Co. has the following information
available:
Answer: 30,500
12. Brown Company's bank statement for September 30, showed a cash balance of
P1,350. the company's Cash account in its general ledger showed a P995 debit
balance. The following information was also available as of September 30.
Answer: 1,730
13. In preparing its August 31, Year 2 bank reconciliation, Apex Corp. had available the following
information:
Answer: 18,550
14. On April 3, 20xx, Smiles Inc. received from a courier its bank statement. The following
information were given:
Answer: 1,752,000
15.
Answer: 8,440,000
16. Covid Company has cash in bank of P10,000 including a restricted cash of P3,000, and a bank
overdraft in an account at the same bank of P1,000. Covid Company should report cash
Answer: 6,000
17. Covid Company has the following items at year-end:
Answer: 20,300
18. At June 30, Almond Co.'s cash balance was P10,012 before adjustments, while its
ending bank statement balance was P10,772.
Check number 101 was issued June 2 in the amount of P95, but was erroneously
recorded in Almond's general ledger balance as P59. The check was correctly listed in
the bank statement at P95. The bank statement also included a credit memo for
interest earned in the amount of P35, and a debit memo for monthly service charges in
the amount of P50. What was Almond's adjusted cash balance at June 30?
Answer: 9,961
19. Maja Corp. keeps all its cash in a checking account. An examination of the company's
accounting records and bank statement for the month ended December 31, 2019
revealed bank statement balance of P80,344 and a book balance of P88,404.
A deposit of P47,500 on December 29,2019 does not appear on the bank statement. Checks
outstanding on December 31, 2019 amount to P113,500.
The bank statement shows that on December 26, 2019, the bank collected a note for Maja Corp.
and credited the proceeds of P46,750 to the company's account. The proceeds included P1,750
interest, all of which Maja Corp. earned during the current period. Maja Corp. has not yet
recorded the said collection.
Maja Corp. discovered that check number 021261 written in December 2019 for P9,150 in payment
of an account had been recorded in the company's records as P1,590.
Included with the December 31, 2012 bank statement was an NSF check of P112,500 that Maja
Corp. had received from Mahal Company on December 22. Maja Corp. has not yet recorded the
returned check. The bank statement shows a P750 service charge for December 2019.
Answer: 14,344
Cash and Bank Reconciliation
1. In a bank reconciliation, NSF checks are: Subtracted from the book balance Added to the bank
balance.
● Subtracted from the book balance
● Added to the bank balance
● Subtracted from the bank balance
● Added to the book balance
2. All of the following may be included under the heading of “cash” except:
● Money orders
● Manager’s check
● Unused postage stamps
● Traveler’s check
3. HALOOO
- What is the adjusted cash balance on December 31, 2019? Answer: 14, 344
- The journal entry to adjust the cash balance as of December 31, 2109 is net credit cash of:
Answer: 74,060
4. Under which section of the statement of financial position is “cash restricted for plant expansion”
reported?
● Non-current assets
● Current assets
● Equity
● Current liabilities
6. HELLOOO
10. A cash equivalent is a short-term, highly liquid investment that is readily convertible
into known amounts of cash and
● Is so near its maturity that it presents insignificant risk of changes in interest rates
● Bears an interest rate that is at least equal to the prime rate of interest at the date
of liquidation
● Has a current market value that is greater than its original cost
● Is acceptable as a means to pay current liabilities
11. On May 31, 2019, your company's cash account indicates the company has P2,317. A
review of the bank statement shows deposits in transit of P440.28 and outstanding
checks of P1,180. The review also indicates the bank collected notes and interest of
P214.20, an NSF check for P85.12, and charged fees of P6. Which of the following is
correct?
● The bank balance on May 31, 2019 is P3,181.49
● The correct cash balance is P2,440.97
● All statements are correct
● NSF checks are subtracted on the bank reconciliation
12. Which of the following items should not be included in the Cash caption on the
statement of financial position?
● Coins and currency in the cash register
● Postage stamps on hand
● Checks from other parties presently in the cash register
● Amounts on deposit in checking account at the bank
14. At December 31, 2019, Covi Co. had the following balances in the accounts it maintains at First
State Bank:
Answer: 240,000
15. hello
17. Covid Company had the following account balance at December 31, 2019:
Answer: 2,375,000