QUIZ IN UPDATES IN FINANCIAL REPORTING STANDARDS

COVERAGE: CONCEPTUAL FRAMEWORK TO BANK RECONCILIATION

1. Which of the following is considered and recognized as expense based on

“associating cause and effect”?
a) Insurance expense
b) Cost of goods sold
c) Research expense
d) Depreciation

2. Neutrality provides assurance that the information presented on the

financial statements are
a) Prudent
b) Complete
c) Reliable
d) Fair

3. STATEMENT 1: A compensating balance that is legally restricted as to

withdrawal cannot be included as part of cash and cash equivalents but
can be presented as current asset.
STATEMENT 2: Checks drawn which are post-dated should be reverted
back to cash even if the checks are already delivered to the payees.
a) Only statement 1 is correct
b) Only statement 2 is correct
c) Both statements are correct
d) Both statements are incorrect

4. In replenishing a petty cash fund, which one of the following entries is

required?
a) Dr. Petty Cash, Cr. Cash in bank
b) Dr. Petty Cash, Cr. Expense account
c) Dr. Expense account, Cr. Cash in bank
d) Dr. Cash in bank, Cr. Petty Cash

5. The adjusting entries for a bank reconciliation

a) May include a debit to office expense for bank service charge
b) May include a credit to accounts receivable for an NSF customer check
c) May include a debit to accounts payable for an NSF customer check
d) Are taken from the “balance per bank” portion only
At December 31, 2023, JEWELRY CORP reported the following as composition
of its Cash and Cash Equivalents in its Statement of Financial Position:
Cash in bank - AAB Bank PHP
200,000.00
Cash in bank - CB Bank
75,000.00
Cash in bank - JMD Bank (15,000.00)
Cash in bank - LDG Bank
150,000.00
Cash on hand
150,000.00
Contingency fund
15,000.00
Demand deposit - AAB Bank
150,000.00
Dividend fund
20,000.00
Escrow deposit
50,000.00
Foreign bank account - unrestricted (in
equivalent pesos) 100,000.00
Fund for acquisition of PPE
100,000.00
IOUs from employees
45,000.00
Manager's check
25,000.00
Money market placement due 2/5/2024
40,000.00
Money market placement due 6/2/2024
50,000.00
Payroll Account - JMD Bank
250,000.00
 Payroll fund
50,000.00
Petty cash fund
25,000.00
Postage stamps
5,000.00
Post-dated check, from customer
30,000.00
Revolving fund
20,000.00
Time deposit - AAB Bank
1,000,000.00
Traveler's check
100,000.00
Treasury bills (purchased 12/25/23, maturing
4/1/24) 60,000.00
Treasury note
25,000.00
Treasury shares
45,000.00
Unused credit line
50,000.00

Additional information:
a) Demand deposit to AAB Bank is restricted for the company’s plant
extension next year.
b) Cash in bank in LDG Bank includes a restricted compensating balance of
50,000 for short-term borrowing arrangement.
c) The petty cash fund included an unreplenished December 2023 petty cash
expense vouchers amounting to P10,000.

6. What is the amount of cash for the year ended 2023?

7. What amount should be reported as Cash and Cash Equivalents in the
Statement of Financial Position as of December 31, 2023?
8. What is the amount of Short-Term Investment as of December 31, 2023?
The account for the petty cash fund of Joy Company showed its composition as
follows:
a) Coins and currency P12,000
b) Paid vouchers:
• Due from employees P1,700
• Gasoline P1,200
• Office supplies P750
• Postage stamps P450
• Transportation P2,800
c) Manager’s check returned by bank marked “NSF” P1,500
d) Check drawn by the entity to the order of petty cash custodian, P3,250

9. What is the correct amount of petty cash fund to be presented in its

financial statement?

In Preparing the Bank Reconciliation in December, ABC Company provided the

following:
1. Balance Per Bank Statement -------- PHP 3,800,000.00
2. Deposit in Transit --------------------- 520,000.00
3. Amount erroneously credited by the bank to ABCCorp 40,000.00
4. Bank service charge for December ---------------- 5,000.00
5. NSF Check ------------------------------------------- 50,000.00
6. Outstanding Checks --------------------------------- 675,000.00

10. What amount was reported as unadjusted cash in bank balance per
book?