SEATWORK 1A 7.

Restricted deposits in foreign bank are classified as

1. Which of the following should not be considered a. Current asset with appropriate disclosure.
cash?
a. Petty cash fund b. Noncurrent asset with appropriate disclosure.
b. Money order
c. Coin and currency c. Be written off as loss.
d. IOU
d. As part of cash and cash equivalents.
2. Which of the following is usually considered cash?
a. Certificate of deposit 8. What is a compensating balance?
b. Checking account a. Saving account balance
c. Money market saving certificate
d. Postdated check b. Demand deposit account balance

3. Which of the following should not be included in
cash?
a. Travel cash advance
b. Certified check
c. Personal check
d. Manager check
4. All of the following may be included in cash, except
a. Currency
b. Money market instrument
c. Checking account balance
d. Saving account balance
5. Which statement is true about reporting bank
overdraft under IFRS?
a. Overdraft typically cannot be offset against
positive balance in other cash account but
reported as current liability.
b. Generally, cash overdraft is not allowed.
c. Overdraft can be offset against other bank
account when payable on demand and often
fluctuates from positive to overdrawn as an
integral part of cash management.
d. All of these statements are true about bank
overdraft.
c. Temporary investment as collateral for loan
d. Minimum deposit required to be maintained
in connection with a borrowing arrangement
9. Compensating balance represents
a. Fund in a bank account that cannot be spent
b. Balance in a payroll checking account
c. Account that is subject to bank service charge
d. Account on which a bank pays interest
10. 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.

6. Technically, cash may not include

a. Foreign currency
b. Money order
c. Restricted cash
d. Undeposited customer check
SEATWORK 1B
1. A cash equivalent is a short-term, highly liquid
investment readily convertible into known amount of
cash and
a. Is acceptable as a means to pay current liability

b. Has a greater current market value

c. Bears a prime interest rate

d. Is so near maturity that it presents insignificant

risk of change in interest rate

2. Highly liquid investments are cash equivalents if the

maturity is 90 days or less
a. From the date the investments are acquired

b. From the end of reporting period

c. From the date of issue of financial statements

d. From the beginning of reporting period

3. All can be classified as cash and cash equivalents,

except
a. Redeemable preference shares due in 60 days

b. Commercial papers due for repayment in 90

days

c. Equity investments

d. A bank overdraft

4. Cash equivalents do not include

a. Money market funds
b. High grade marketable equity investments
c. BSP treasury bills
d. Commercial papers

5. Cash equivalents are

a. Treasury bills and money market instruments.

b. Investments with original maturity of three

months or less.

c. Readily convertible into known amount of cash.

d. All of these are features of cash equivalents.

SEATWORK 1C
1. The internal control feature specific to petty cash is
a. Separation of duties
b. Assignment of responsibility
c. Proper authorization
d. Imprest system
2. What is the major purpose of an imprest petty cash
fund?
a. To effectively plan cash inflows and outflows
b. To ease the payment of cash to vendors
c. To determine the honesty of the petty cashier
d. To effectively control cash disbursements
3. The petty cash fund account under the imprest fund
system is debited
a. Only when the fund is created.
b. When the fund is created and everytime it is
replenished.
c. When the fund is created and when the size
of the fund is increased.
d. When the fund is created and when the fund
is decreased.
4. Which statement in relation to an imprest petty cash
is incorrect?
a. The imprest petty cash system in effect
adheres to the rule of disbursement by check.
b. Entries are made to the petty cash account
only to increase or decrease the size of the fund
or to adjust the balance if not replenished at
year-end.
c. The petty cash account is debited when the
fund is replenished.
d. The petty cash fund is reported as part of
cash and cash equivalents under current assets.
5. When an imprest petty cash fund is used, which
statement is true?
a. The balance of the petty cash fund should be
reported in the statement of financial position
as a long-term investment.
b. The petty cashier's summary of petty cash
payments serves as a journal entry that is
posted to the appropriate general ledger
account.
c. The reimbursement of the petty cash fund
should be credited to the cash account.
d. Entries that include a credit to the cash
account should be recorded at the time the
payments from the petty cash fund are made.
6. In reimbursing the imprest petty cash fund, which of
the following statements is true?
a. Cash in debited
b. Petty cash is debited
c. Petty cash is credited
d. Expense accounts are debited
7. A cash over and short account
a. Is not generally accepted.
b. Is debited when the petty cash fund proves
out over.
c. Is debited when the petty cash fund proves
out short.
d. Is a contra account to cash.
8. Petty cash fund is
a. Separately classified as current asset
b. Money kept on hand for making minor
disbursements of coin and currency rather than
by writing checks
c. Set aside for the payment of payroll
d. Restricted cash
SEATWORK 1D

Tranvia Company had the following balances on December 31,2022:

Cash in checking account 350,000

Cash in money market account 750,000
Treasury bill, purchased November 1, 2022
maturing January 31, 2023 3,500,00
Time deposit purchased December 1,2022
maturing March 31,2023 4,000,000

What amount should be reported as cash and cash equivalents on December 31, 2022?
Show solution
a. 1,100,000
b. 3,850,000
c. 4,600,000
d. 8,600,000

SEATWORK 1E

Pygmalion Company had the following balances on December 31,2022:

Cash in bank - current account 5,000,000

Cash in bank - payroll account 1,000,000
Cash on hand 500,000
Cash in bank-restricted account for building
construction expected to be disbursed in 2023 3,000,000
Time deposit, purchased December 15,2022 and
due March 15,2023 2,000,000

The cash on hand included a P200,000 check payable to Pygmalion, dated January 15,2023.

What total amount should be reported as cash and cash equivalents on December 31,2022? Show solution

a. 6,300,000
b. 8,300,000
c. 6,500,000
d. 8,700,000
SEATWORK 1F

Everlast Company reported the following information at year-end:

• Share investments of P1,000,000 that are very actively traded in the stock market.
• Government treasury bills of P2,000,000 with a 10-year term but purchased on December 31 at which time they
had two months to go until maturity.
• Cash of P3,400,000 in the form of coin, currency, saving account and checking account.
• Commercial papers of P1,500,000 with term of nine months but purchased on December 31 at which time they
had three months to go until maturity.

1. What total amount should be reported as cash?

a. 3,400,000
b. 4,900,000
c. 4,400,000
d. 5,400,000
2. What total amount should be reported as cash equivalents?
a. 2,000,000
b. 1,500,000
c. 3,500,000
d. 4,500,000

Show solution

SEATWORK 1G

On December 31, 2022, West Company had the following cash balances:

Cash in bank - current account 1,800,000

Petty cash fund - all funds were reimbursed at year-end 50,000
Time deposit due February 1, 2023 250,000
Time deposit in bank closed by BSP 1,000,000

Cash in bank included P600,000 of compensating balance against short-term borrowing arrangement on December 31,
2022. The compensating balance is legally restricted as to withdrawal.

On December 31, 2022, what total amount should be reported as cash and cash equivalents?
a. 2,500,000
b. 1,250,000
c. 2,100,000
d. 1,500,000
Show solution
SEATWORK 1H
Campbell Company had the following account balances on December 31, 2022:
Petty cash fund 50,000
Cash in bank - current account 4,000,000
Cash in bank - payroll account 1,200,000
Cash in bank - sinking fund 2,000,000
Cash on hand 500,000
Cash in bank - restricted account for plant addition
and expected to be disbursed in 2023 1,500,000
Treasury bills 1,000,000

The petty cash fund included unreplenished December 2022 petty cash expense vouchers P5,000 and
employee IOU P5,000.

The cash on hand included a P100,000 customer check payable to Campbell dated January 15, 2023.

In exchange for a guaranteed line of credit, the entity has agreed to maintain a minimum balance of P200,000 in the
unrestricted current bank account.

The sinking fund is set aside to settle a bond payable that is due on December 31, 2023.

What total amount should be reported as cash and cash equivalents on December 31, 2022?
a. 8,640,000
b. 7,440,000
c. 7,640,000
d. 5,640,000

Show solution