Which of the following is considered cash for financial reporting purposes?

(10 secs)

I. Money Orders
II. Coins and Currency
III. Bank account for acquisition of land
IV. Post Dated Checks
V. Change Funds

a. I, II, IV, V
b. I, II, V
c. I, II
d. I, II, II, IV, V
Farfetch’d Corporation received from Corviknight company a 4-year, 12% note on January 1, 2020 for P500,000.
in exchange for consultation services rendered. The fair value of the services is not readily determinable, and
the note is not readily marketable. The note is considered to have an appropriate imputed rate of interest of
10%. Annual interest is receivable every December 31.

How much is the carrying value of the note on December 31, 2020?
a. 500,000
b. 584,863
c. 531,694
d. 524,863
These are checks issued but not have been presented as
payment to bank. (10 Secs)
 On March 31, 2020, Milotic INC. had a cash account at three different Banks. (10 Secs)
 
Account 1 @ Bank 1- to be use for payment of equipment on April 2020
Account 2 @ Bank 2- This checking account is used for regular operations and has a
credit book balance.
Account 3 @ Bank 3- This is used for daily operations and has a positive book balance.

How should these accounts be reported in Milotic’s March 31,2020 SFP?

a. Account 1- Non-Current Asset; Account 2 and 3- Current Asset

b. Account 1 and 3- Current Asset; Account 2- Current liability
c. Account 1- Non-Current Asset; Account 2- Current Liability; Account 3- Current Asset
d. All Accounts are reported as Current Asset.
On October 31, 2020 Absol Company engaged in the following transaction:
Obtained P500,000 from a 6-month loan from Zacian discounted at 12%. The company pledged P600,000 of
accounts receivables as security for the loan

Factored P1,000,000 of accounts receivable without recourse on a notification basis with Eldegoss finance
company. Eldegoss finance charged a factoring fee of 5% of the amount of receivables factored and with the
held 10% of the receivables factored.
 
What is the total cash received on October 32,2020 as the result financing?
a. 1,350,000
b. 1,290,000
c. 1,320,000
d. 1,500,000
Which form of receivable financing is equivalent to absolute sale of accounts receivable? (10 secs)

a. Discounting with recourse

b. Pledging
c. Assignment
d. Factoring
Zarude Company sold one of its equipment on January 1, 2020 to Singapore Company in exchange for a non-
interest bearing note requiring five annual payments of P 500,000 or a total of P 2,500,000. The equipment had
a carrying amount of P 1,750,000 in Zimbabwe’s books. The first payment is due on December 31, 2020. The
market interest for similar notes was 10%. Use four decimal places for PV Factor

How much is the interest income for the year 2020?

a. 250,000
b. 379,100
c. 139,550
d. 189,540
Pikachu company writes off as uncollectible an account receivable from a bankrupt
customer. The company has an adequate amount allowance for bad debts. The transaction
will most likely

a. Decrease current profit

b. Decrease total current asset
c. Decrease owner’s equity
d. No effect to total assets
Statement 1: IFRS 9 adopts a model that requires an entity to recognize expected losses at all times, and to
update its estimates of expected credit losses at each reporting date to reflect the changes in the credit risk of
financial instruments.
 
Statement 2: IFRS 9 states that a company will recognize notes receivable only when the entity becomes a party
to a contractual provision of the instrument, that is when the entity becomes a payor of the note issued.
 
a. True; False
b. False; True
c. False; False
d. True; True
A bond investment with interest payment dates on May 1 and November 1 is purchased on August 1. The
amount of (A) interest receivable and (B) interest income on December 31 would be equal to.

a. (A) 5 months (B) 8 months

b. (A) 2 months (B) 8 months
c. (A) 5 months (B) 5 months
d. (A) 2 months (B) 5 months
On May 1, 2017, Milotic Company purchased a P2,000,000 face value 9% debt instruments for P1,860,000
including the accrued interest. The business model in managing the financial assets is to generate short-term
profits from changes in fair value of the securities. The debt instruments pay interest semi-annually on January
1 and July 1. On December 31, 2017, the fair market value of the instruments is P1,940,000.

How much is the unrealized gain or loss that should be taken to profit or loss for the year 2017?

a. 80,000
b. 60,000
c. 140,000
d. 0
If an entity fails to amortize the premium on its trading bond investment, the income is:
(overstated, understated, or no effect)
Gengar Company cash balance per ledger shows a balance of $5,200,000 on March 31, 2020 which includes the
following:
 Petty Cash Fund 10,000 

 Check no. 1333- dated March 15,2020 already recorded but not yet mailed as of EOM  200,000

 Check not yet deposited for 19 months  30,000

 Customer Check dated April 03, 2020  100,000

 DAIF Check  90,000

 Traveler’s Check  75,000

 Postal Money Order  30,000

 Savings Deposit 255,000 

 Bond Sinking Fund- for a bond maturing after 2 years 1,210,000 

 Equipment Acquisition Fund  1,200,000

 Cash in Bank- Demand Deposit 2,000,000 

What is the correct cash balance to be reported on SFP on March 31, 2020?
Upon examination of the petty cash fund of Magikarp Company on August 31, 2020, the following items were found:

Total bills and coins P 6,800

Paid vouchers (not yet replenished):  
Office supplies 500
Transportation 600
Postage stamps 200
Due from employees 2,000
Manager’s check returned by bank marked “NSF” 1,500

Check drawn by the company, payable to the order of 5,000

Pikachu, petty cash custodian, representing her salary

Certified check from Mr. Klefki 1,200

Unused supplies 100
Unused postage stamps 150
Two envelopes:  
A sealed envelope containing contributions from 2,000
employees for a birthday gift of a co-employee

An empty envelope for donation 3,000

The fund was established at an amount of P20,000.

How much is the cash (shortage)/overage?

When Investments in debt securities are purchased between interest payment dates, preferably the
 
a. securities account should include accrued interest.
b. accrued interest is debited to Interest Expense.
c. accrued interest is debited to Interest Revenue.
d. accrued interest is debited to Interest Receivable
Dragonite Company provided the month-end bank statement which showed a balance of P8,135,700. Checks
not yet cleared in the bank P4,500,000, and deposit of P407,000 that are still in transit. DAUD Checks amounted
to P20,000, bank service charge of P5,200 and a note of P120,000 collected by the bank, however not yet
known to Dragonite.

What is the unadjusted balance per book?

If the yield rate for a bond is greater than its coupon rate, the bond is acquired at

a. Face value
b. Maturity value
c. A discount
d. A premium
 On December 31, 2018, Dialga Company invested in the 5-year bonds of Arceus Corporation face value of
P 4,000,000 with 12% Interest payable per year and 14% yield rate. The bonds mature in five years. The company
has a business model of collecting contractual cash flows including interest and principal for all debt investments
During 2016, Arceus Company's business deteriorated due to political instability and faltering global economy.
After reviewing all evidences at December 31, 2020, Dialga company determined that it was probable that Arceus
Company will still be able to pay the annual interest on the original loan but at a reduced principal of 3,400,000 at
maturity. As a result, Dialga company decided that the investment in bond was impaired and that a loss should be
recognized Immediately.
 
What amount of impairment loss should Dialga Company recognize on its debt instrument? (Round off PV
factors to four decimal places)
Lucario Inc. had the following bank reconciliation on September 30:

Balance per bank statement, September 30 P2,100,000

Deposit in transit 200,000
Outstanding checks 700,000
Balance per book, September 30 1,600,000
   
   
The bank statement for the month of October showed the  
following:
   
Deposits, including P100, 000 note collected for Lucario Inc. 8,500,000
Disbursements, including P120, 000 NSF customer check 6,800,000
and P5, 000 service charge

All reconciling items on September 30 cleared through the bank in October. Total deposit in transit
P900, 000 and outstanding checks amounted to P400, 000 on October 31.

What is the unadjusted cash balance per book on October 31? (Difficult) 60 secs
 On July 1 2018. Silvally Company purchased P4,000,000 of 16% bonds to yield 14 Interest is payable semi-
annually on January 1 and July 1. The bonds mature in five years. Silvally Company uses the calendar year and
the effective interest method amortization. The investment was designated as Investment at FVOCI. Round off
PV factors to four decimal places. On May 31, 2021. Silver Samurai sold P 1,000,000 face value of the bonds at
101 plus accrued interest. Market values of the bonds on different dates are as follows:
 
December 31, 2018 108
December 31, 2019 106
December 31, 2020 104
 
How much is the unrealized gain or loss that should be presented in the statement of financial position on
December 31, 2019?