Intermediate Accounting 1

First Periodical Exam

SY 2023-2024
Theories (35 items) b. recording shortages in the fund.
c. replenishing the petty cash fund.
1. Which of the following should not be included in "cash"? d. establishing the fund.
A. Certified check C. Personal check
B. Manager check D. Travel cash advance 9. Bank reconciliations are normally prepared on a monthly basis
to identify adjustments needed in the depositor's records and to
2. Which of the following are non-cash items? identify bank errors. Adjustments on the part of the depositor
I. customer’s check awaiting deposit should be, recorded for
II. Insurance fund A. Outstanding checks and deposits in transit.
III. Preferred stock redemption fund B. Bank errors, outstanding checks and deposits in transit.
IV. postal money orders C. Book errors, bank errors, deposits in transit and outstanding
V. revolving fund checks.
VI. Sinking fund – related bond is due currently D. All items except bank errors, outstanding checks and deposits
VII. Contingent fund in transit.
VIII. dividend fund
A. I,IV,V,VIII 10. Which of the following is not considered cash for financial
B. II,III, VI, VII reporting purposes?
C. II,III, VII a. Petty cash funds and change funds
D. I,II,III,V,VI,VII b. Money orders, certified checks, and personal checks
E. I,II,III,VI,VII c. Coin, currency, and available funds
3. Which of the following items are true: d. Postdated checks and I.O.U.'s
I. Savings accounts are usually classified as cash on the balance
sheet. 11. Which of the following is considered cash?
II. Certificates of deposit are usually classified as cash on the a. Certificates of deposit (CDs)
balance sheet. b. Money market checking accounts
III. Companies include postdated checks and petty cash funds as c. Money market savings certificates
cash. d. Postdated checks
IV. Bank overdrafts are always offset against the cash account in
the balance sheet 12. A Cash Over and Short account
V. Short-term, highly liquid investments may be included with cash a. is not generally accepted.
on the balance sheet. b. is debited when the petty cash fund proves out over.
a. I, II, and V c. is debited when the petty cash fund proves out short.
b. I and V d. is a contra account to Cash.
c. I, II, IV, and V
d. I and II 13. The journal entries for a bank reconciliation
e. all of the above a. are taken from the "balance per bank" section only.
b. may include a debit to Office Expense for bank service
4. Which of the following is not considered as a cash equivalent in charges.
the December 31, 2020 financial statements? c. may include a credit to Accounts Receivable for an NSF check.
A. Treasury bill d. may include a debit to Accounts Payable for an NSF check.
B. Money market placement
C. A three-year treasury note maturing on March 15 2021 14. When preparing a bank reconciliation, bank credits are
purchased by the entity on December 15, 2020 a. added to the bank statement balance.
D. A three-year treasury note maturing on January 15, 2021 b. deducted from the bank statement balance.
purchased by the entity on July 1, 2020 c. added to the balance per books.
d. deducted from the balance per books.
5. All of the following can be classified as cash and cash
equivalents, except? 15. If the balance shown on a company's bank statement is less
A. Negative bank balance (A bank overdraft ) than the correct cash balance, and neither the company nor the
B. Equity investments bank has made any errors, there must be
C. Commercial papers held and due for repayment in 90 days a. deposits credited by the bank but not yet recorded by the
D. Redeemable preference shares acquired and due in 60 days company.
b. outstanding checks.
6. Which is false concerning measurement of cash and cash c. bank charges not yet recorded by the company.
equivalents? d. deposits in transit.
A. Cash in foreign currency is measured at the current exchange
rate. 16. If the cash balance shown in a company's accounting records
B. Cash equivalents should be measured at maturity value, is less than the correct cash balance, and neither the company
meaning face value plus interest. nor the bank has made any errors, there must be
C. If a bank or financial institution holding the funds of the entity a. deposits credited by the bank but not yet recorded by the
is in bankruptcy or financial difficulty, cash should be written down company.
to estimated realizable value. b. deposits in transit.
D. deposits in foreign bank which are subject to foreign exchange c. outstanding checks.
restriction shall be classified as current assets but not cash d. bank charges not yet recorded by the company.
E. both B and D
17. Which of the following would not be classified as cash?
7. Which of the following items are false: a. Personal checks
I. The sum of the money on hand and petty cash receipts in a b. Travelers' checks
petty cash fund will always be equal to the balance in the Petty c. Cashiers' checks
Cash account. d. Postdated checks
II. When the petty cash fund is replenished, the petty cash
account is credited for the total of all expenditures made since the 18. Bank statements provide information about all of the following
fund was last replenished. except
III. Most companies who have several bank accounts, petty cash, a. checks cleared during the period.
and cash on hand, would list each separately on the balance b. NSF checks.
sheet.. c. bank charges for the period.
IV. The petty cash fund eliminates the need for a bank checking d. errors made by the company.
account.
A. All of the above 19. Which of the following items would be added to the book
B. None of the above balance on a bank reconciliation?
C. I and IV only a. Outstanding checks
D. II and III only b. A check written for $63 entered as $36 in the accounting
E. I and III only records
c. Interest paid by the bank
8. Entries are made to the Petty Cash account when d. Deposits in transit
a. making payments out of the fund.
 Intermediate Accounting 1
First Periodical Exam
SY 2023-2024
20. In preparing a bank reconciliation, interest paid by the bank on
the account is
a. added to the bank balance.
b. subtracted from the bank balance.
c. added to the book balance.
d. subtracted from the book balance.
21. In preparing a monthly bank reconciliation, which of the
following items would be added to the balance reported on the
bank statement to arrive at the correct cash balance?
a. Outstanding checks
b. Bank service charge
c. Deposits in transit
d. A customer's note collected by the bank on behalf of the
depositor
22. Bank reconciliations are normally prepared on a monthly basis
to identify adjustments needed in the depositor's records and to
identify bank errors. Adjustments should be recorded for
a. bank errors, outstanding checks, and deposits in transit.
b. all items except bank errors, outstanding checks, and deposits
in transit.
c. book errors, bank errors, deposits in transit, and outstanding
checks.
d. outstanding checks and deposits in transit.
23. In reimbursing the imprest petty cash fund, which of the
following statements is true?
a. Cash in debited
b. Petty cash in debited
c. Petty cash is credited
d. Expense accounts are debited
32. Which is recorded by a credit to accounts receivable?
a. Sale of inventory on account
b. Estimating the allowance for uncollectible accounts
c. Estimating annual sales returns
d. Writeoff of accounts receivable
33. Receivables from subsidiaries are classified as
a. Current assets
b. Noncurrent assets
c. Either as current or noncurrent depending on the
expectation of realizing within one year or over one
year
d. Partly current and partly noncurrent
34. Where the operating cycle extends beyond one year because
of normal credit terms as in the case of installment
a. The entire receivables are classified as current with
disclosure of the amount not currently due.
b. The entire receivables are shown as noncurrent.
c. The portion due in one year I shown as current and the
balance as noncurrent.
d. The receivables are not recognized.
35. In the case of long-term real estate installment sales
a. The entire receivables are shown as current without
disclosure of the amount not currently due.
b. The entire receivables are shown as noncurrent.
c. Only the portion currently due is shown as current and
the balance as noncurrent.
d. The entire receivables are not recorded.
Problems (20 items)

24. Technically. cash may not include The following information is from the December 31, 2005 trial
a. Foreign currency balance of Peso Corporation
b. Money order
c. Restricted cash Cash on hand 372,000
d. Undeposited customer check Petty cash fund 10,000
BPI current account 950,000
25. Restricted deposits in foreign bank are classified as Security Bank current account 1,280,000
a. Current asset with appropriate disclosure No. 01
b. Non-current asset with appropriate disclosure Security Bank current account (40,000)
c. Be written off as loss. No. 02
d. As part of cash and cash equivalents. PNB savings account 500,000
PNB time deposit 300,000
26. Trade receivables are classified as current assets if
reasonably expected to be collected Cash on hand includes the following items:
a. Within one year.
b. Within the normal operating cycle. a. Customer’s check for P60,000 returned by bank on
c. Within one year or within the operating cycle, December 26, 2005 due to insufficient fund but
whichever is shorter. subsequently redeposited and cleared by the bank on
d. Within one year or within the operating cycle, January 8, 2006.
whichever is longer. b. Customer’s check for P30,000 dated January 2, 2006,
received on December 29, 2005.
c. Postal money orders received from customers,
27 Nontrade receivables are classified as current assets only if
P36,000.
reasonably expected to be realized in cash
a. Within one year or within the operating cycle, whichever
The petty cash fund consisted of the following items as of
is shorter. December 31, 2005.
b. Within one year or within the operating cycle, whichever
is longer. Currency and coins P 2,100
c. Within the normal operating cycle. Employees’ vales 1,600
d. Within one year, the length of the operating cycle Currency in an envelope marked
notwithstanding. “collections for charity” with names 1,200
attached
28. Credit balances in accounts receivable are classified as Unreplenished petty cash vouchers 800
a. Current liabilities Check drawn by Peso Corporation, 4,600
b. Part of accounts payable payable to the petty cashier
c. Long term liabilities P10,300
d. Deduction from accounts receivable Included among the checks drawn by Peso Corporation against
29. Which should be recorded in accounts receivable? the BPI current account and recorded in December 2005 are the
a. Receivables from officers following:
b. Receivables from subsidiaries a. Check written and dated December 29, 2005 and delivered
c. Dividends receivable to payee on January 2, 2006, P50,000.
d. Sales on account b. Check written on December 27, 2005, dated January 2,
30. Accounts receivable should normally be reported at 2006, delivered to payee on December 29, 2005, P86,000.
a. Present value of future cash receipts The credit balance in the Security Bank current account No. 2
b. Current value plus accrued interest represents checks drawn in excess of the deposit balance. These
c. Expected amount to be received checks were still outstanding at December 31, 2005.
d. Current value less expected collection cost
The savings account deposit in PNB has been set aside by the
31. Which of the following does not change the balance in board of directors for acquisition of new equipment. This account
accounts receivable? is expected to be disbursed in the next 3 months from the balance
a. Return on credit sales sheet date.
b. Collection from customers
c. Bad debt expense adjusting entry QUESTIONS:
d. Writeoff
 Intermediate Accounting 1
First Periodical Exam
SY 2023-2024
1. Cash on hand (excluding PCF) d. P38,500
a. P282,000 b. P408,000
c. P246,000 d. P342,000 Lira Company prepared the following bank reconciliation dated
2. Petty cash fund June 30 of the current year.
a. P6,700 b. P2,100 Balance per bank 9,800,000
c. P9,100 d. P10,000 Deposits in transit 400,000
3. BPI current account Outstanding checks (1,400,000)
a. P1,086,000 b. P1,000,000 Balance per book 8,800,000
c. P914,000 d. P950,000 There were total deposits of P6,500,000 and charges for
4. Cash and cash equivalents disbursements of P9,000,000 for July per bank statement. All
a. P2,914,700 b. P2,614,700 reconciliation items on June 30 cleared the bank on July 31.
c. P2,954,700d. P3,414,700 Checks outstanding amounted to P1,000,000 and deposits in
transit totaled P1,200,000 on July 31.
5. A Company had the following transactions all throughout the
9. What is the amount of cash disbursements per book in July?
year 2020 which is its first year of operations: A.7,600,000 C. 8,600,000
Sales (90% collected in first year) P 1,500,000 B. 8,400,000 D. 9,400,000
Bad debt written-off 60,000
Disbursements for cost and expenses 1,200,000 10. What is the adjusted cash in bank on July 31?
Disbursements for income taxes 90,000 A. 6,300,000 C. 7,300,000
Purchases of fixed assets 400,000 B. 6,500,000 D. 7,500,000
Depreciation on fixed assets 80,000
Proceeds from issuance of ordinary share 500,000 11. On December 31, 2020, the cash account of A
Proceeds from short-term borrowings 100,000 Company consists of the following items to be considered:
Payments on short-term borrowings 50,000 1. Commercial savings account of P1,200,000 and a
What is the cash balance at December 31, 2020? commercial checking account balance of P1,800,000 are
a. P150,000 c. P210,000 held at PS Bank.
b. P170,000 d. P280,000 2. Travel advances of P360,000 for executive travel for the first
quarter of the next year (employee to reimburse through
6. The petty cash fund of Hellflower Trading at the end of salary deduction).
December 31, 2022 is composed of the following: 3. A separate cash fund in the amount of P3,000,000 is
Currencies and coins – 3,200 restricted for the retirement of a long term debt.
4. Petty cash fund of P10,000.
Unreplenished paid vouchers:
5. An I.O.U. from a company officer in the amount of P40,000.
Supplies – 600
6. A bank overdraft of P250,000 has occurred at one of the
Transportation – 100
IOU from employee – 300 Company’s PS Bank accounts which is used to deposit its
Unused supplies – 50 cash receipts. The amount is considered immaterial for
Check drawn by a sales staff dated January 2, 2023 – 500 (tips, financial reporting purposes.
this is an accommodation check however look at the date of the 7. The company has two certificates of deposit, each totaling
check) P1,000,000. These certificates of deposit have maturity of
Check dawn by a customer dated December 26, 2022 – 1,450 120 days.
(This is an undeposited collection) 8. A has received a check dated January 2, 2021 in the amount
Check drawn by an office director dated December 30, 2022 – of P150,000.
1,900 (tips, this is an accommodation check) 9. A has agreed to maintain a cash balance of P200,000 at all
Envelope containing cash contributions from employees for a times at PS Bank to ensure future credit availability.
thanksgiving party – 800 10. Currency and coin on hand amounted to P15,000.
How much will be reported as cash and cash equivalent at
The general ledger balance of the imprest petty cash fund at December 31, 2020?
December 31, 2022 is P10,000. a. P3,025,000 c. P2,775,000
How much is the cash shortage/overage? b. P2,825,000 d. P5,025,000
A. 3,400
B. 1,100 12. A Company reported petty cash fund with the following
C. 3,350 details:
D. 1,100 Coins & Currencies 22,000
Petty cash vouchers:
7. In preparing its August 31, 2010 bank reconciliation, Bing Corp. Gasoline payments for delivery equipment 3,000
has available the Medical supplies for employees 1,000
following information: Repairs of office equipment 1,500
Balance per bank statement, 8/31/10 P21,650 Loans to employees 3,500
Deposit in transit, 8/31/10 3,900 A check drawn by the entity payable to the order of B,
Return of customer's check petty cash custodian, representing her salary 15,000
for insufficient funds, 8/30/10 600 An employee's check returned by the bank for insufficiency of
Outstanding checks, 8/31/10 2,750 funds 3,000
Bank service charges for August 100 A sheet of paper with names of several employees together with
At August 31, 2010, Bing's correct cash balance is contribution for a birthday gift of a co-employee. Attached to the
a. P22,800. sheet of paper is a currency of 5,000. The petty cash general
b. P22,200. ledger account has an imprest balance of 50,000.
c. P22,100. What is the amount of petty cash fund that should be reported in
d. P20,500. the statement of financial position?
A. 22,000 C. 37,000
8. Tresh, Inc. had the following bank reconciliation at March 31, B. 27,000 D. 42,000
2010:
Balance per bank statement, 3/31/10 P37,200 13. At December 31, 2020, Aris Co. had the following balances in
Add: Deposit in transit 10,300 the accounts it maintains at First State Bank:
47,500 Checking account #101 P175,000
Less: Outstanding checks 12,600 Checking account #201 (10,000)
Balance per books, 3/31/10 P34,900 Money market account 25,000
Data per bank for the month of April 2010 follow: 90-day certificate of deposit,
Deposits P46,700 due 2/28/21 50,000
Disbursements 49,700 180-day certificate of deposit,
All reconciling items at March 31, 2010 cleared the bank in April. due 3/15/21 80,000
Outstanding checks at April 30, 2010 totaled P6,000. There were In its December 31, 2020 statement of financial position, what
no deposits in transit at April 30, 2010. What is the cash balance amount should Aris report as cash and cash equivalents?
per books at April 30, 2010? A. P190,000 C. P240,000
a. P28,200 B. P200,000 D. P320,000
b. P31,900
c. P34,200
 Intermediate Accounting 1
First Periodical Exam
SY 2023-2024
14. On December 31, 2020, Alfonso Company had the following The proper amount to be shown as cash on Trask's balance sheet
cash balances: at December 31, 2005, is
Cash in bank P15,000,000 a. 7,600.
Petty cash fund 50,000 b. 8,000.
Time deposit 5,000,000 c. 8,600.
Saving deposit 2,000,000 d. 9,750.
Cash in bank includes P500,000 of compensating balance against
short term borrowing arrangement at December 31, 2020. The 19. The books of Coping Corporation showed cash balance of
compensating balance is legally restricted as to withdrawal by P890,000 at December 31, 2002. Included in the balance
Alfonso. A check of P300,000 dated January 15, 2021 in payment are the following items:
of accounts payable was recorded and mailed on December 31, ● Petty cash fund of P5,000. When the fund was
2020. In the current assets section of the December 31, 2020 counted on December 31, only P3,000 are in the form
statement of financial position of Alfonso Company, what amount of currency and coins and the remainder is supported
should be reported as “cash and cash equivalents”? by paid petty cash vouchers.
A. P21,850,000 C. P21,800,000 ● Certificates of time deposit P100,000 maturing on
B. P16,850,000 D. P14,850,000 February 28, 2003, and have a term of 120 days.
● Undeposited checks from customers P80,000;
P52,000 of which are dated December 2002 while two
15. A Company had the following account balances on December
of the checks aggregating P28,000 are dated January
31,2022: 2003.
Cash in banks 2,250,000 ● A bank deposit in a savings account held for purchase
Cash on hand 125,000 of special equipment to be delivered on January 8,
Cash legally restricted for additions 2003, P120,000.
to plant (expected to be disbursed in What amount of “Cash” should be shown on the balance
January 5, 2023) 1,600,000 sheet at December 31, 2002?
Cash in banks includes 600,000 of compensating balances A. 588,000 C. 740,000
against short-term borrowing arrangements. The compensating B. 640,000 D. 760,000
balances are legally restricted as to withdrawal by A. In the
current assets section of A’s December 31, 2022 balance sheet, 20. The following pertains to Miraflor, Inc. on December 31 of the
total cash should be reported at current year: Checking account balance P925,000; an
a. 1,775,000 overdraft in special checking account at same bank as
b. 2,250,000 normal checking account of P17,000; certificate of deposit
c. 2,375,000 P400,000; cash held in a bond sinking fund P200,000;
d. 3,975,000 postdated check from customer P11,000; certified check
from customer P9,800; NSF cheek received from customer
16. A Company had the following account balances on December P15,000; cash advance to subsidiary of P300,000; postage
31,2022: stamps on hand P620; utility deposit paid to electric
Cash in banks 2,250,000 company P8,000; currency and coins in a petty cash fund
Cash on hand 125,000 (the company has not replenished the fund to the imprest
Cash set aside to pay bonds amount of P5,000) P800. The correct amount that should
(which will mature in be reported as cash is
January 5, 2023) 1,600,000 A. P908,800 C. P1,318,600
Cash in banks includes 600,000 of compensating balances B. P918,600 D. P1,322,800
against short-term borrowing arrangements. The compensating
balances are not legally restricted as to withdrawal by A. In the
current assets section of A’s December 31, 2022 balance sheet,
total cash should be reported at
a. 1,775,000
b. 2,250,000
c. 2,375,000
d. 3,975,000

17. A Company had the following account balances on December

31, 2022:
Cash in banks 2,250,000
Cash on hand 125,000
Cash legally restricted for additions
to plant (expected to be disbursed in
2023) 1,600,000
Cash in banks includes 600,000 of compensating balances
against short-term borrowing arrangements. The compensating
balances are not legally restricted as to withdrawal by A. In the
current assets section of A’s December 31, 2022 balance sheet,
total cash should be reported at
a. 1,775,000
b. 2,250,000
c. 2,375,000
d. 3,975,000

18. Trask Corporation's checkbook balance on December 31,

2005, was 8,000. In addition, Trask held the following items in its
safe on December 31:
Check payable to Trask Corporation, dated January 2, 2006, not
included in December 31 checkbook balance
.................................................................................2,000
Check payable to Trask Corporation, deposited December 20,
and included in December 31 checkbook balance, but returned by
bank on December 30, stamped "NSF." The check was
redeposited January 2, 2006, and cleared January 7
……………………………………………………………..400
Post-dated checks ..................................................... 150
Check drawn on Trask Corporation's account, payable to a
vendor, dated and recorded December 31, but not mailed until
January 15, 2006
.................................................................................1,000