ACC 106: Intermediate Accounting 1

Student Activity Sheet Module # 3

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

Lesson Title: Materials:

Cash and Cash Equivalents Calculator, Reviewer Notebook, Textbook

Learning Targets: References:

At the end of the learning session, I should be able to: Millan, Zeus Vernon B.; Intermediate
1. Identify the items that are included in Cash and Cash Accounting 1
equivalents.
2. Explain the measurement of cash.
3. Describe the financial statement presentation of cash.

Productivity Tip:
Start with a big smile! ☺ Organize your study place before going through with the activities.

A. LESSON PREVIEW/REVIEW
1) Activity 1 : Introduction/Review (2 mins)
Hello there! ☺ Do you still remember what you learned last time? Let’s just have a quick recap.
Encircle the best answer and let’s see if your memory is sharp. Check if you got it right under the Key to
Corrections part at the end of this module. You may start.
1. Reversing entries are
1. normally prepared for prepaid, accrued, and estimated items.
2. necessary to achieve a proper matching of revenue and expense.
3. desirable to exercise consistency and establish standardized procedures.
a. 1
b. 2
c. 3
d. 1 and 2
2. Adjusting entries that may be reversed include
a. all accrued revenues.
b. those that debit an asset or credit a liability.
c. all accrued expenses.
d. all of these.
3. Which of the following errors may be revealed by a trial balance?
a. A debit to salaries expense was posted in the ledger as a debit to insurance expense.
b. Expense already incurred was not recorded.
c. The debit and credit posting of a credit sale were omitted.
d. The credit posting of a payment of account payable was omitted.

2) Activity 2 (LO1, LO2, & LO3): What I Know Chart, part 1 (3 mins)
Alright! Let’s see what you already know, answer the first column (What I know). Leave the
third column (What I Learned) blank at this time.
ACC 106- Intermediate Accounting 1
SAS Day 3
 ACC 106: Intermediate Accounting 1
Student Activity Sheet Module # 3

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

What I Know Questions What I Learned (Activity 5)

1. What are Cash and Cash
Equivalents?

2. Give at least two examples of

cash equivalents?

3. In a financial statement
presentation, what is the
classification of Cash and Cash
Equivalents?

B. MAIN LESSON
1) Activity 3 (LO1, LO2, & LO3): Content Notes (10 mins)
Make sure to highlight or underline the important parts!

LO1: Identify the items that are included in Cash and Cash equivalents

Cash includes money or its equivalent that is readily available for unrestricted use.
Undeposited collections awaiting deposit and Refers to deposits in banks that are available for
other current funds as of the reporting date. immediate withdrawal and unrestricted use.

Examples of Cash
● Coins and currencies
● Demand deposits and savings account
● Bank drafts
● Money Orders
● Checks (Cashier’s checks, Personal check, Manager’s check, Traveller’s checks and Certified check
● Cash funds set aside from current operations (Petty cash fund, Revolving fund, Payroll fund, Change
fund, Dividend fund, Tax fund, Travel fund, Interest fund)

Items NOT included as Cash

● Post-dated checks
● IOUs or advances to employees
● Cash funds not available for use in current operations (e.g. sinking fund)
● Postage stamps

Cash Equivalents (PAS 7.6)

- Short term
ACC 106- Intermediate Accounting 1
SAS Day 3
 ACC 106: Intermediate Accounting 1
Student Activity Sheet Module # 3

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

- Highly liquid investments

- That are readily convertible to known amounts of cash
- Which are subject to an insignificant risk of changes in value
*Only debt instruments acquired within 3 months or less before their maturity date can qualify as cash
equivalents.

Examples of Cash equivalents

● (3 Months or Less ) Date of Acquisition Before Maturity Date
- Treasury bills, notes or bonds acquired within 3 months or less before their maturity date
Money market instrument or commercial paper acquired within 3 months or less before their maturity date
● (3 Months or Less ) Term of the Instrument
-3 month-time deposit

LO2: Explain the measurement of cash.

Measurement of Cash
Cash is measured at Face Amount.

Cash denominated at foreign currency is translated at the current exchange rate at the reporting date.
Cash in banks undergoing bankruptcy is not included in cash and presented as receivable measured at
realizable value.

LO3: Describe the financial statement presentation of cash.

Financial Statement Presentation

Description Account title Classification

Unrestricted cash and Cash and cash equivalents Current assets

unrestricted cash equivalents are
combined and presented as a
single line item “Cash and Cash
Equivalents”.
The breakdown of the line item is
disclosed in the notes.

Restricted cash with restriction of (Other) Short term investments Current assets
6months to 12months

Restricted cash with restriction of Other noncurrent assets Noncurrent assets

more than 12months

2) Activity 4: Skill-building Activities (15 mins + 2 mins checking) Score: ________________

Let’s try to practice what you have learned! Check your answers against the Key to Corrections found
at the end of this SAS. Write your score on the space provided.
ACC 106- Intermediate Accounting 1
SAS Day 3
 ACC 106: Intermediate Accounting 1
Student Activity Sheet Module # 3

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

Part I. Modified True or False. Write TRUE if the statement is correct, otherwise,write FALSE if it is
wrong and change the underlined word to make the statement correct.
1. Money that is readily available for restricted use can be presented as part of cash. ____________
2. Cash includes cash on hand and cash in the bank. ______________
3. Checks are always presented as part of cash. ______________
4. Postdated checks and IOUs are not part of cash for financial reporting purposes. ______________
5. Money market instruments are considered as cash for financial reporting purposes._____________
6. Cash is measured at fair value. ______________
7. Manager’s check and Certified check are considered as cash. ______________
8. Money orders are considered as cash for financial reporting purposes. _______________
9. Shares of stocks or equity instruments can qualify as cash equivalents. ______________
10. Redeemable preference shares acquired 3 months or less before redemption date can qualify as
cash equivalents. _______________

Part II. Multiple Choice. Encircle the Letter of Your Choice.

1. The following information is provided for Iloilo Corp.:

* The commercial savings account of P 1,200,000 and a commercial checking account balance of
P1,800,000 are held at PS bank.
* A separate cash fund in the amount of P 3,000,000 is restricted for the retirement of a long-term debt.
* Petty cash fund of P10,000.
* An IOU from a company officer of 45,000.
* Currency and coin on hand amounted to P 15,000.
* Iloilo Corp. Has agreed to maintain a cash balance of P200,000 at all times at PS bank to ensure
future credit availability.

Compute for the cash and cash equivalents to be reported in the Dec. 31, 2019 statement of financial
position
a. 3,025,000 b. 3,000,000 c. 2,755,000 d. None of the above
2. Guim Co. Provides the following information as of Dec. 31, 2019:
Demand deposit account P2,000,000
Time deposit- 30 days 1,000,000
NSF check of customer 40,000
Money market placement due June 30, 2020 1,500,000
Pension fund 3,000,000
Petty cash fund 10,000
Customer’s check outstanding for 18 mos. 40,000

Compute for the cash and cash equivalents to be reported in the Dec. 31, 2019 statement of financial
position
a. 3,010,000 b. 3,000,000 c. 4,500,000 d. None of the above
3. Which of the following statements is incorrect?

ACC 106- Intermediate Accounting 1

SAS Day 3
 ACC 106: Intermediate Accounting 1
Student Activity Sheet Module # 3

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

a. Cash that is restricted within one year from the end of the reporting period should be included in
noncurrent assets.
b. Cash funds that are specifically for the retirement of long-term debts not maturig currently should be
excluded from current assets and shown as a noncurrent investment.
c. Investments that can be liquidated at once and with little risk of loss of principal may be classified as
cash equivalent and included in the caption “Cash and cash equivalents”.
d. Cash and cash equivalents is always presented as the first line item in the statement of financial
position
4. Which of the following may qualify as cash equivalent?
a. Investment in ordinary shares acquired on Dec. 31, 2019, expected to be sold within the next three
months.
b. Treasury notes acquired on Nov. 1, 2019 maturing on March 31, 2020.
c. One -year money market placements.
d. Investment in redeemable preference shares acquired on DEc. 1, 2019, maturing on Feb. 28, 2020.
5. 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.
6. The “cash” account in Gina company’s ledger on December 31;2015 showed a balance of 525,000 which
included the following;
Petty cash fund 5, 000
Undeposited receipts, including a postdated check of 10.000 130,000
Cash in bank 250,000
Cash in sinking fund 100,000
Vouchers paid out of collections, not yet recorded 25,000
IOU’s signed by employees 15,000
Total 525,000
At what amount should Gina company report as “cash” on the December 31,2015 statement of financial
position?
a. 525,000 b. 375,000 c. 475,000 d. None of the above
7. Maria Co. had the following account balances at Dec. 31, 2016
Cash in bank 2,250,000
Cash on hand 125,000
Cash legally restricted for addition to plant and expected to be disbursed in 2017 1,600,000

Cash in bank includes P600,000 compensating balances against short term borrowing arrangements. The
compensating balances are legally restricted as to withdrawal by Maria. Total cash should be reported at
a. 1,850,000 b. 1,775,000 c. 3,800,000 d.None of the above
8. On December 31, 2009, West 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

ACC 106- Intermediate Accounting 1

SAS Day 3
 ACC 106: Intermediate Accounting 1
Student Activity Sheet Module # 3

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

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 the 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?
a. 1,800,000 b. 1,850,000 c. P1,850,000 d.None of the above
9. Global Inc provided the following information as of Dec. 31, 2019

Employee’s NSF check 10,000

Postage stamps 2,000
IOU from president 50,000
Traveler’s check 20,000
Money order 60,000
Petty cash fund (expense receipts of P5,000) 15,000
What is the cash balance to be reported on the statement of financial position?
a. 95,000 b. 85,000 c. 90,000 d. None of the above
10. The cash balance of Fiona Co. consists of the following on Dec. 31, 207

Cash on hand including customer postdated check 10,000 250,000

Petty cash, including IOU from employee of 5,000 20,000
Saving deposit, earmarked for acquisition of machinery 200,000
What is the correct cash balance?
a. 200,000 b. 215,000 c. 255,000 d. None of the above
11. Tarlac Corporation provided the information for the year ended Dec. 31, 2019

Treasury bills, due 3/30/20 (purchased 12/29/19) 200,000

Treasury bills, due 1/31/20 (purchased 2/29/19) 300,000
Money order 50,000
IOU from controller’s sister 30,000
Credit memo from a vendor for a purchase return 20,000
Money market placement (due June 30, 2020) 100,000
What are the cash and cash equivalents to be reported on the statement of financial position?
a. 350,000 b. 550,000 c.250,000 d. None of the above
12. XYZ Co. Holds the following short-term investments as of Dec. 31, 20x1:
1- year Treasury bill maturing on March 30, 20x2, acquired on July 1, 20x1, 500,000.
1- year Treasury bill maturing on March 30, 20x2, acquired on Dec. 1, 20x1, 600,000.
1- year Treasury bill maturing on April 1, 20x2, acquired on Dec. 31, 20x1, 700,000

How much will be the total cash equivalents as of Dec. 31, 20x1?
a. 500,000 b. 1.200,000 c.700,000 d. None of the above

13. YZ Co. Holds the following short-term investments as of Dec. 31, 20x1:
Treasury shares P 500,000
Redeemable preference shares purchased 1 month. Before maturity 200,000
Certified check 100,000
ACC 106- Intermediate Accounting 1
SAS Day 3
 ACC 106: Intermediate Accounting 1
Student Activity Sheet Module # 3

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

Manager’s check 50,000

Change fund 5,000
Treasury bill, purchased 12/31/20x1, maturing 2/28/20x2 30,000
What is the cash to be reported on the statement of financial position?
a. 135,000 b. 255,000 c. 155,000 d. None of the above
14. Given the same information as above in # 13, What are the cash and cash equivalents to be reported on
the statement of financial position?
a. 485,000 c. 285,000 c. 385,000 d. None of the above
15. Global Inc provided the following information as of Dec. 31, 2019

Employee’s NSF check P 10,000

IOU from president 50,000
Traveler’s check 20,000
Money order 60,000
Petty cash fund (expense receipts of P5,000) 15,000
Treasury bill, purchased 12/31/20x1, maturing 2/28/20x2 30,000
Cashier’s checks 20,000
Treasury bill, purchased 12/31/2019, maturing 1/31/2020 350,000
What are the cash and cash equivalents to be reported on the statement of financial position?
a. 380,000 b. 210,000 c. 490,000 d. None of the above

Part III. Encircle the letter of your choice.

1. Which of the following is not considered cash for financial reporting purposes?
a. Petty cash funds and change funds
b. Money orders, certified checks, and personal checks
c. Coin, currency, and available funds
d. Postdated checks and I.O.U.'s
2. Which of the following is considered cash?
a. Certificates of deposit (CDs)
b. Money market checking accounts
c. Money market savings certificates
d. Post-dated checks
3. Travel advances should be reported as
a. supplies.
b. cash because they represent the equivalent of money.
c. investments.
d. none of these.

4. Which of the following items should not be included in the Cash caption on the balance
sheet?
a. Coins and currency in the cash register
b. Checks from other parties presently in the cash register
c. Amounts on deposit in checking account at the bank
d. Postage stamps on hand
ACC 106- Intermediate Accounting 1
SAS Day 3
 ACC 106: Intermediate Accounting 1
Student Activity Sheet Module # 3

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

5. All of the following may be included under the heading of "cash" except
a. currency.
b. money market funds.
c. checking account balance.
d. savings account balance
6.In which accounts are post-dated checks received classified?
a. Receivables.
b. Prepaid expenses.
c. Cash.
d. Payables.
7. In which account are postage stamps classified?
a. Cash.
b. Office supplies.
c. Receivables.
d. Inventory.
8. What is a compensating balance?
a. Savings account balances.
b. Margin accounts held with brokers.
c. Temporary investments serving as collateral for outstanding loans.
d. Minimum deposits required to be maintained in connection with a borrowing arrangement.
9. Under which section of the balance sheet is "cash restricted for plant expansion"
reported?
a. Current assets.
b. Non-current assets.
c. Current liabilities.
d. Stockholders' equity.
10. A cash equivalent is a short-term, highly liquid investment that is readily convertible into
known amounts of cash and
a. is acceptable as a means to pay current liabilities.
b. has a current market value that is greater than its original cost
c. bears an interest rate that is at least equal to the prime rate of interest at the date of liquidation.
d. is so near its maturity that it presents insignificant risk of changes in interest rates.

3) Activity 5: What I Know Chart, part 2 (3 mins)

It’s time to answer the questions in the “What I Know Chart” in Activity 2. Write your answers in the
“What I Learned” column. Let’s see your improvement!

4) Activity 6 (LO1, LO2, & LO3): Check for Understanding (10 mins)
To better test your knowledge on the topic, write in the space provided in each item the best answer
without looking in your content notes. Be honest at all times. Your teacher will provide you the key answer in
this activity.

1. The following were taken from the records of SML Co. As of Dec. 31, 20x1:

ACC 106- Intermediate Accounting 1

SAS Day 3
 ACC 106: Intermediate Accounting 1
Student Activity Sheet Module # 3

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

Checks drawn but not yet issued to payees P 120,000

Customers’ checks dated Jan. 15, 20x2 35,000
Customers’ checks dated Dec. 31, 20x1 40,000
SML’s dated Jan 15, 20x2 already mailed to payee 16,000
Cash on hand 130,000
Employees’ checks representing unclaimed salaries held by the treasurer 14,000
Petty cash fund (fully replenished) 10,000

Requirement: How much of the items listed above will be included in SML’s Dec. 31, 20x1 cash?
_________________

2. The records of ABC Co. Showed the following:

Treasury bill acquired on Nov. 1, 20x1 , maturing on Jan. 31, 20x2 300,000
Money market placement to RCBC trust made on Dec. 31, 20x1
maturing on August 31, 20x2 800,000
Investment in redeemable preference shares of XYZ Inc.
redeemable on March 31, 20x2 , purchased on Dec. 31, 20x1 1,500,000
Three-month time deposit with UCPB unrestricted for
withdrawal 950,000
Investment in equity securities in DEF Co., purchased
Dec. 31, 20x1 to be sold on Jan 5, 20x2 450,000

How much of the items listed above will be included in ABC Co.’s Dec 31, 20x1 cash equivalents?
_________________

3. Trans Co. had the following balances at December 31, 2009:

Cash in checking account P 35,000

Cash in money market account 75,000
Treasury bill, purchased 11/1/2009, maturing 1/31/2010 350,000
Treasury bill, purchased 12/1/2009, maturing 3/31/2010 400,000

Tran’s policy is to treat as cash equivalents all highly liquid investments with a maturity of three months or
less when purchased. What amount should Trans report as cash and cash equivalents in its December 31,
2009, balance sheet (statement of financial position)?
_________________

4. The cash balance of CAPSIZE OVERTURN Co. comprises the following:

Cash on hand 300,000

Cash in bank – savings – BPI 600,000
ACC 106- Intermediate Accounting 1
SAS Day 3
 ACC 106: Intermediate Accounting 1
Student Activity Sheet Module # 3

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

Cash in bank – current – BPI (240,000)

Cash in bank – deposit in escrow – Metrobank 300,000
Cash in bank – current – Metrobank ( 60,000)
Cash in bank – current – BDO ( 90,000)
Total 810,000
Additional information:
Cash on hand includes undeposited collections of P60,000.
The cash in bank – savings maintained at BPI includes a P150,000 compensating balance which is not
restricted.

What amount of cash is reported in the financial statements?

_________________

5. On December 31, 2009, West 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 the 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?
_________________
6. Caloocan Corp. Had the following records for the year ended Dec. 31, 2019
Current account at Metrobank P 2,000,000
Payroll account 500,000
Foreign bank account (restricted) P 1,000,000
Postage stamps 1,000
Traveler’s check 50,000
Not-sufficient-funds check 15,000
Money market instrument-90 days 60,000
How much is the cash to be reported on Dec. 31, 2019?
_________________

7. Laguna Corp. contains the following records for the year ended Dec. 31, 2019

Money order P 30,000

Treasury bills, due 3/30/ 2020, (purchased 12/29/19) 200,000
Treasury bills, due 1/31/2020 (purchased 2/15/19) 300,000
Money market instrument- 90 days 100,000
Savings account 500,000

Compute for the cash to be reported on Dec. 31, 2019 statement of financial position
____________________

ACC 106- Intermediate Accounting 1

SAS Day 3
 ACC 106: Intermediate Accounting 1
Student Activity Sheet Module # 3

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

8. Given the same information in No. 7 (Laguna Corp.), how much is classified as cash equivalents only for
the year ended Dec. 31, 2019?

_________________

9. Given the same information in No. 7 (Laguna Corp.), how much is classified as cash and cash
equivalents for the year ended Dec. 31, 2019?
_________________

10. The books of ABC Co. Show the following balances at Dec. 31, 2019:

Cash on hand P 100,000

Cash in Bank - current account 350,000
Cash in bank peso savings deposit 2,000,000
Cash in bank-dollar deposit (unrestricted) $ 100,000
Cash in bank-dollar deposit (restricted) 20,000
Cash in money-market account 250,000
6-month time deposit $ 60,000
Treasury bond, purchased 3/1/19, maturing 2/28/20 P 800,000
Treasury note 200,000
Unused credit line 2,000,000
Sinking fund 400,000
Traveler’s check 50,000
*Exchange rate at year-end is $1 to P40.

Compute for the cash and cash equivalents to be reported in the Dec. 31, 2019 statement of financial
position
____________________

C. LESSON WRAP-UP
1) Activity 7: Thinking about Learning (5 mins)

1. Work Tracker

You are done with this session! Let’s track your progress. Shade the session number you just
completed.

2. Think about your Learning

ACC 106- Intermediate Accounting 1

SAS Day 3
 ACC 106: Intermediate Accounting 1
Student Activity Sheet Module # 3

Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

From a rating of 1-10, determine if you have learned all the learning objectives. What is the reason
for your rating?
________________________________________________________________________________
________________________________________________________________________________

What part of the module gave you a hard time to comprehend?

________________________________________________________________________________
________________________________________________________________________________

Any other questions or concerns you want to raise?

________________________________________________________________________________
________________________________________________________________________________

2) Assignment
To enhance your knowledge regarding the topic, answer Problems 1, 2, and 3 in your book. Your
teacher will provide the key answers later on.

FAQs
1. How does the imprest system work? And what are the two systems of handling petty cash funds?

- The imprest system is an internal control device for cash which requires that all cash receipts should
be deposited intact and all cash payments should be made by means of check, but small
disbursements are paid out of the petty cash fund.
- (1) Imprest fund system- petty cash expenses are recorded upon replenishment. The amount of the
replenishment is normally equally to the petty cash disbursements.
(2) Fluctuating fund system- Petty cash expenses are immediately recorded. The amount of
replenishment may be equal to, more or less than, the petty cash disbursements.

ACC 106- Intermediate Accounting 1

SAS Day 3