2nd Semester AY 2021-2022

Intermediate Accounting I

FIRST ACTIVITY

Instructions: Read each question carefully then choose the correct/best answer.

1. 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.

2. Which of the following would not be classified as cash?

a. Personal checks
b. Travelers' checks
c. Cashiers' checks
d. Postdated checks

3. What is the proper accounting treatment for a stale check?

a. Revert back to cash and accounts payable.
b. Revert back to cash and a credit to gain.
c. Ignored
d. Either a or b

4. Which of the following is not a basic characteristic of a system of cash control?

a. Use of a voucher system
b. Combined responsibility for handling and recording cash
c. Daily deposit of all cash received
d. Internal audits at irregular intervals

5. The principal purpose of a voucher system is to provide assurance that

a. all cash receipts are deposited intact in the bank.
b. all cash disbursements are approved before a check is issued.
c. all cash receipts are recorded in the accounting records.
d. all purchase invoices are supported by debit memoranda.

6. On January 1, 2002, Kyle Corporation established a petty cash fund of ₱400. On December 31,
2002, the petty cash fund was examined and found to have receipts and documents for
miscellaneous expenses amounting to ₱364. In addition, there was cash amounting to ₱44. What
entry would be required to record replenishment of the petty cash fund on December 31, 2002?

a. Petty Cash.................... 364

 Cash Short and Over......... 8
Cash in bank 356
b. Miscellaneous Expense......... 364
Cash Short and Over......... 8
Petty Cash.................. 356
c. Miscellaneous Expense......... 364
Cash Short and Over......... 8
Cash in bank 356
d. Miscellaneous Expense......... 356
Cash Short and Over......... 8
Cash in bank 364

7. 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 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. P1,200,000
b. P1,250,000
c. P1,800,000
d. P1,850,000

8. 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)?
a. P110,000
b. P385,000
c. P460,000
d. P860,000

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

Cash on hand 300,000
Cash in bank – savings – BPI 600,000
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?

a. 660,000
b. 810,000
c. 900,000
d. 960,000

10. As of December 31, 20x1, the petty cash fund of TUMULT COMMOTION Co. with a general
leger balance of P15,000 comprises the following:
Coins and currencies P 2,550
Petty cash vouchers:
Gasoline for delivery equipment P3,000
Medical supplies for employees 2,040 5,040
IOU’s:
Advances to employees 2,220
A sheet of paper with names of several employees
together with contribution to bereaved employee,
attached is a currency of 2,400
Checks:
Check drawn to the order of the petty cash custodian 3,000
Personal check drawn by the petty cash custodian 2,400

The entry to record the replenishment of the petty cash fund includes
a. A debit to cash short/overage account of P2,190 and a credit to cash on hand of P9,450.
b. A credit to cash short/overage account of P810 and a credit to cash of P12,450.
c. A debit to cash short/overage account of P810 and a credit to petty cash fund of P12,450.
d. A debit to cash short/overage account of P2,190 and a credit to cash in bank of P9,450.

11. It is a report that is prepared for the purpose of bringing the balances of cash per records and per
bank statement into agreement.
a. Bank statement
b. Check Disbursement Voucher
c. Bank reconciliation
d. Bank deposit slip

12. These are deposits made but not yet credited by the bank to the depositor’s bank account.
a. Credit memos (CM)
 b. Debit memos (DM)
c. Outstanding checks (OC)
d. Deposits in transit (DIT)

13. These are deductions made by the bank to the depositor’s bank account but not yet recorded by
the depositor.
a. Credit memos (CM)
b. Debit memos (DM)
c. Outstanding checks (OC)
d. Deposits in transit (DIT)

14. These are additions made by the bank to the depositor’s bank account but not yet recorded by
the depositor.
a. Credit memos (CM)
b. Debit memos (DM)
c. Outstanding checks (OC)
d. Deposits in transit (DIT)

15. These are checks drawn and released to payees but are not yet encashed with the bank.
a. Credit memos (CM)
b. Debit memos (DM)
c. Outstanding checks (OC)
d. Deposits in transit (DIT)

16. Which of the following is added to the cash balance per books when preparing a bank
reconciliation statement?
a. Credit memo
b. Debit memo
c. Outstanding check
d. Deposit in transit

17. Which of the following is added to the cash balance per bank statement when preparing a bank
reconciliation statement?
a. Credit memo
b. Debit memo
c. Outstanding check
d. Deposit in transit

18. Which of the following represents a debit memo?

a. Collections made by the bank on behalf of the depositor.
b. Interest income earned by the deposit.
c. Loan proceeds directly credited or added by the bank to the depositor’s account.
d. Interest expense on a loan that is directly deducted from the depositor’s account.

19. Which of the following is not a debit memo?

 a. Bank service charges
b. No sufficient funds checks (NSF)
c. Automatic debits representing payments of bills by the bank on behalf of the depositor
d. Direct deposits of customers to the depositor’s account

20. As an internal control, bank reconciliation statements are usually prepared

a. on a daily basis.
b. on a monthly basis.
c. annually every year-end.
d. whenever the accountant feels like it.

21. Entity A is preparing its November 30, 20x1 bank reconciliation statement. The following
information was determined:

 Cash balance per accounting books, Nov. 30, 20x1 ₱600,000

 Cash balance per bank statement, Nov. 30, 20x1 ₱860,000
 Credit memo ₱380,000
 Debit memo ₱ 60,000
 Deposits in transit ₱100,000
 Outstanding checks ₱ 40,000

How much is the adjusted cash balance per book?

22. Entity A is preparing its February 28, 20x1 bank reconciliation statement. The following
information was determined:
 Cash balance per accounting books, Feb. 28, 20x1 ₱260,000
 Cash balance per bank statement, Feb. 28, 20x1 ₱205,000

When investigating the difference, the accountant determined the following:

a. A customer deposited ₱30,000 to Entity A’s bank account as payment for an account receivable.
This is not yet recorded in the books of accounts.
b. A ₱102,500 check deposited by Entity A during the month is not yet credited to Entity A’s
account.
c. A check drawn in the amount of ₱22,500 is not yet presented to the bank for payment.
d. The bank returned a check deposit amounting to ₱5,000 because of insufficiency in the funds of
the drawer. The check was received from a customer as payment for accounts receivable.

How much is the adjusted cash balance per bank?

23. Entity A is preparing its March 31, 20x1 bank reconciliation. The following information was
determined:
a. The cash balance per books is ₱280,000 while the cash balance per bank statement is ₱320,000.
b. Credit memo – ₱20,000
c. Debit memo – ₱15,000
d. Deposits in transit – ₱75,000
e. Outstanding checks – ₱25,000
f. The disbursements per books are overstated by ₱45,000.
g. The bank debits are understated by ₱40,000.

How much is the adjusted cash balance per bank?

24. Data concerning the cash records of Arones Company for the months of November and
December 20x1 are shown below:
November 30 December 31
Book balance 11,200 ?
Book debits 63,800
Book credits 56,400
Bank balance 30,000 40,800
Bank debits ?
Bank credits 54,600
Notes collected by bank 4,500 6,000
Bank service charge 40 200
NSF checks 1,760 2,800
Overstatement of check in payment
of salaries 3,800 2,400
Deposit in transit 12,000 22,500
Outstanding checks 19,500 35,700
Deposit of 123 Corporation erroneously
credited to ABC Co.’s account 4,800 3,600

How much is the adjusted cash balance per book for the month of November?

a. P13,900
b. P22,500
c. P17,700
d. P27,300

25. According to the provided information in Question 24, how much is the bank debits for the
month of December?
a. P56,400
b. P55,200
c. P43,800
d. P54,600
26. According to the provided information in Question 24, how much is the adjusted cash balance
per bank for the month of December?
a. P24,000
 b. P27,600
c. P21,600
d. P31,200
27. According to the provided information in Question 24, how much is the adjusted bank receipts
for December?
a. P54,600
b. P61,500
c. P65,100
d. P65,300
28. According to the provided information in Question 24, how much is the adjusted book
disbursements for December?
a. P55,200
b. P56,400
c. P60,000
d. P64,800
29. According to the provided information in Question 24, how much is the adjusted cash balance
per book for the month of December?
a. P21,600
b. P27,600
c. P24,000
d. P31,200
30. According to the provided information in Question 24, how much is the book balance for
December 31?
a. P18,600
b. P40,800
c. P24,000
d. P11,200

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