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INTERMEDIATE ACCOUNTING
CASH AND CASH EQUIVALENTS
(THEORIES)

PROF. U.C. VALLADOLID

Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.

1. If material, deposits in foreign bank which are subject to foreign exchange restriction shall be classified as
a. Separately as current asset, with appropriate disclosure
b. Separately as noncurrent asset with appropriate disclosure
c. Be written off as a loss
d. As part of cash and cash equivalents

2. Most preferred form of reconciling book and bank balance is

a Book to Bank Method
b Bank to Book Method
c Proof of Cash Method
d Adjusted Balance Method

3. Bank reconciliations are normally prepared on a monthly basis to identify adjustments needed in the depositor’s
records and to identify bank errors. Adjustments on the part od the depositor should be reported for
a. Bank errors, outstanding checks and deposits in transit
b. All items except bank errors, outstanding checks and deposit in transits
c. Book errors and bank errors only
d. Outstanding checks and deposits in transit

4. If the balance shown in the bank statement is less than the correct cash balance and neither the entity nor the bank
has made any errors, there must be
a. Deposits credited by the bank but not yet recorded by the entity
b. Outstanding checks
c. Deposits in transit
d. Bank charges which are not yet recorded by the entity

5. Which of the following cannot be considered as cash?

a. Money Order
b. Petty Cash Fund
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c. IOU
d. Coin and Currency

6. What will be the effect if petty cash is not replenished at year-end and appropriate adjusting entry is not made?

a. Cash will be understated and expenses are overstated

b. The petty cash should be charged to the petty cash custodian

c. The cash will be overstated and expenses are understated

d. No effect

7. Which of the following should not be 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. Post-dated checks and IOUs

8. A customer’s post-dated check is treated as

a. Accounts Receivables
b. Cash
c. Prepaid expenses
d. Accounts Payable

9. Compensating balance is
a. Saving account balance
b. Demand deposit account balance
c. Minimum deposit required to be maintained in connection with a borrowing arrangement
d. Temporary investment serving as collateral for outstanding loan

10. What is Petty Cash Fund?

a. Separately classified as current asset
b. Set aside for the payment of payroll
c. Restricted cash
d. Money kept on hand for making minor disbursements of coin and currency rather than by making checks

11. What is the internal control feature specific to petty cash?

a. Separation of duties
b. Assignment of responsibility
c. Imprest system
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d. Proper authorization

12. Which of the following should not be considered cash for financial reporting purposes?
a. Money orders, certified checks and personal checks
b. Post-dated checks and IOUs
c. Coin, currency and available funds
d. Petty cash funds and change funds

13. The petty cash account under the imprest fund system is debited
a. Only when the fund is created
b. when the fund is created and every time it is replenished
c, when the fund is created and when the size of the funds increased
d. when the fund is created and the size of the funds decreased.

14. Which of the following items must be added to the cash balance per ledger in preparing a bank reconciliation which
ends with the adjusted cash balance?
a. Notes receivable collected by bank in favor of the depositor and credited to the account of the depositor
b. NSF customer check
c. Service charge
d. Erroneous bank debt

15. Which of the following is not a part of cash and cash equivalent?
a Time Deposit.
b Money Market Instrument
c Equity Securities
d Petty Cash

16. Bank overdraft

a. is offset against demand deposit account in another bank.
b. which cannot be offset is classified as current liability.
c. is a debit balance in a cash bank account.
d. which cannot be offset is classified as current asset.

17. If a balance shown on a company’s bank statement is less than the correct cash balance and neither the company nor
the bank has made any errors, there must be (
a. Deposits credited by the bank but not yet recorded by the company
b. Outstanding Checks
c. Deposits in Transit
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d. Bank charges not yet recorded by the company

18. When an imprest petty cash fund is used, which of the following statements is true?
a. The balance of the petty cash fund should be reported in the statement of financial position as a long-term
investment.
b. The petty cash cashier’s summary of petty cash payments serves as a journal entry that is posted to its general
ledger account
c. The reimbursement of the petty cash fund should be credited to the cash account.
d. Entries that include credit to the cash account should be recorded at the time the payments from the petty cash
fund are made.

19. To classify an account as cash and cash equivalents the following must be observe except
a Must be readily available
b Are used to finance operations
c Negotiable Instrument
d Restricted in use

20. A check not encashed by the payee within a relatively long period of time
a Outstanding Checks
b Postdated Checks
c Stale Checks
d Unreleased Checks

21. When the cash or cash equivalent is set aside to settle a liability for more than twelve months, it is considered as:
a. Noncurrent Asset
b. Current Asset
c. Current Liability
d. Noncurrent Liability

22. Typical examples of debit memo, except

a No sufficient Fund Checks
b Technically Defective Checks
c Bank Charges
d Proceeds of Bank Loan

23. In preparing a bank reconciliation, the amount of checks outstanding would be:
A. added to the cash balance according to the bank statement.
B. deducted from the cash balance according to the bank statement.
C. added to the cash balance according to the depositor’s records.
D. deducted from the cash balance according to the depositor’s records.

24. In cash and cash equivalent, to be qualified as one, cash item must be
a. unrestricted in use
b. restricted in use
c. subject to contractual
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d. subject to noncurrent obligations

25. A petty cash fund is:

A. used to pay relatively small amounts.
B. established by estimating the amount of cash needed for disbursements of relatively small amounts during a specified
period.
C. reimbursed when the amount of money in the fund is reduced to a predetermined minimum amount.
D. all of the above.

26. Which of the following is the correct entry to replenish a petty cash fund?
A. Debit Petty Cash; credit Cash in Bank
B. Debit various expense accounts; credit Petty Cash
C. Debit various expense accounts; credit Cash in Bank
D. Debit Cash; credit Petty Cash

27. How are cash equivalents reported in the financial statements?

A. one amount in the Current Assets section of the balance sheet
B. separate from the Current Assets section of the balance sheet
C. added to the total Current Assets
D. Not reported

28. All are considered cash in Financial Reporting purposes except:

a. Bank Drafts
b. Postdated Checks
c. Petty Cash Funds
d. Traveler’s Checks

29. Cash Equivalents are short term and highly liquid investments. An example of this is:
a. Preference shares that was acquired 5 mos. before the redemption date
b. 3 year BSP treasury purchased 3 mos. before its maturity
c. Equity Securities
d. Treasury bill purchased a year ago

30. It is a current asset specifically a cash fund that is set aside for use in current operations or for the payment of current
obligation.
a. Contingent fund
b. Sinking fund
c. Payroll fund
d. Insurance fund

31. It is a format used in bank reconciliation wherein the book balance and the bank balance are brought to a correct cash
balance that must appear on the balance sheet.
a. Book to bank method
b. Bank to book method
c. Unadjusted balance method
d. Adjusted balance method
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32. Cash includes the following except

a. Checks
b. Bank drafts
c. Money Order
d. Treasury Bill

33. Journal entries based on the bank reconciliation are required for:
A. additions to the cash balance according to the depositor’s records.
B. deductions from the cash balance according to the depositor’s records.
C. both A and B.
D. neither A nor B.

34. Statement A: A cash in bank account that is said to be an overdraft has a credit balance

Statement B: Bank overdraft is classified as a current liability and must be an offset against other bank account

Which of the following statements is true?

a. Statement A only

b. Statement B only

c. Both A&B

d. None

35. When petty cash is reimbursed, which of the following is true?

a. Petty cash is debited

b. Expense accounts are credited

c. Petty cash is credited

d. Cash in debited

36. Which of the following would not require an adjusting entry on the depositor’s book

a. Bank service charge

b. NSF check from customer

c. Check in payment of account payable as recorded by the depositor is overstated

d. Deposit of another entity is credited by the bank to the account of the depositor

37. Which of the following shall not be considered as cash and cash equivalents, except?
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a. coin, currency, and available funds.

b. petty cash funds and change funds.
c. postdated checks and IOUs.
d. money orders, certified and bank drafts.

38. Petty cash fund is

a. separately classified as current asset.

b. money kept on hand for making minor disbursements of coin and currency rather than by writing checks.
c. set aside for the payment of payroll.
d. restricted cash.

39. In preparing a bank reconciliation, interest paid by the bank on the combined current and saving account is

a. subtracted from the book balance.

b. added to the book balance.
c. subtracted from the bank balance.
d. added to the bank balance.

40. According to IAS 7 – cash equivalents are

a. short-term and highly liquid investments that are readily convertible into cash.
b. short-term and highly liquid investments that are readily convertible into cash with remaining maturity of three
months.
c. short-term and highly liquid investments that are readily convertible into cash and acquired three months
before maturity.

d. short-term and highly liquid marketable equity securities.

41. All cash items are included in cash except

a. Cash on hand
b. Cash in bank
c. Cash fund
d. Equity Securities
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42. What is bank overdraft?

a. It is when the cash in bank account has a credit balance
b. It is when the cash in bank account has a debit balance
c. It takes the form of minimum checking or demand deposit account balance that must be maintained in connection with
a borrowing arrangement with a bank
d. It is a check drawn, recorded and already given to the payee but it bears a date subsequent to the end of reporting
period

43. It is called a system of control of cash which requires that all cash receipts should be deposited intact and all cash
disbursements should be made by means of check.
a. Fluctuating system
b. Accounting system
c. Imprest system
d. Cash flow system

44. The following are all definition and related to cash short or over account except
a. It is an offsetting account whether it is a cash shortage or cash overage
b. It is only a temporary or suspense account
c. When financial statements are prepared, the same should be adjusted
d. Manager is the one responsible for cash shortage

45. Unreleased checks

a. Should be treated as outstanding checks
b. Should be restored to the cash balance
c. Should be treated as outstanding checks if the date is shortly after the balance sheet
d. Should be treated as outstanding checks if they are ultimately encashed

46. Which of the following is usually considered cash?

a. Certificates of deposit
b. Checking accounts
c. Money market savings certificates
d. Post-dated checks

47. Petty cash fund is

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a. Separately classified as current asset

b. Money kept on hand for making minor disbursements of coin and currency rather than by writing checks
c. Set aside for the payment of payroll
d. Restricted cash

48. The petty cash account under the imprest fund system is debited
a. Only when the fund is created
b. When the fund is created and every time it is replenished
c. When the fund is created and when the size of the funds is increased
d. When the fund is created and when the size of the funds is decrease
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INTERMEDIATE ACCOUNTING
CASH AND CASH EQUIVALENTS
PROBLEMS

PROF. U.C. VALLADOLID

Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.

1. Del Company had the following account balances on December 31,2020:

Cash in Bank-current account ………………………………………………………………. 3,500,000
Cash in bank-payroll account ………………………………………………………………. 1,500,000
Cash on Hand ………………………………………………………………………………………..500,000
Cash in Bank-Restricted for equipment acquisition on 2021………………………………..…1,000,000
Treasury Bill purchased November 1,2020 to mature on May 1,2021………………………..2,000,000

The cash on hand includes a P200,000 customer check payable to Del Company, dated January 15,2021. What should
be reported as cash and cash equivalents on December 31,2020?
a.P5,300,000 c. P6,300,000
b.P7,800,000 d. P5,500,000

2. The following are the cash balances of RIVERA, INC. at December 31, 2022:
Undeposited collections (in currency and coins) P40,200
Current account – unrestricted 620,000
Disbursement checks written and recorded in
December 2010 but are to be released to the
Payees in January 2011 130,000
Restricted time deposits (expected use in June 2022) 2,000,000

Leonor, Inc. has agreed to maintain a P200,000 compensating balance in its unrestricted current account in
accordance with the loan covenant.

How much should Leonor, Inc. report as ash on its December 31, 2022, statement of financial position?
A. P590,200 B. P2,790,200 C. P790,200 D. P750,000

3. On August 1, San Marino Company established an imprest system petty cash fund for P10,000 by writing a check
drawn against the general checking account. On August 30, the fund contained the following:
Currency and coins………………………………………………………………. 3,000
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Receipts for Office Supplies………………………………………………… 4,000

Receipts for postage still unused………………………………………….. 2,000
Receipts for transportation…………………………………………………… 600
On August 30, the entity wrote a check to replenish the fund. What is the amount of replenishment under the imprest fund
system?
a. P10,000 c . P7,000
b. P6,600 d. P3,000

4. In the cash count of the petty cash fund of Marcelo Company as of April 4,2012, you found the following on its petty
cash fund :
Bills and coins counted………………………………………………………………. 3000
Approved and signed petty cash voucher dated April 1-4 …………………………………………………………. 900
IOU from an employee, Albert Primo ……………………………………………………………..……. 1,400
A check drawn by an employee Love Marie, dated April 15,2012 ……………….…………………. 2,000

The petty cash fund has an imprest balance of 12,000. The Company’s reporting period ends on March 30.
What is the correct balance of the petty cash fund?
a. 7,300 c. 3,900
b. 4,700 d. 12,000

5. Tesa Company had the following balances on December 31,2019:

Cash in checking account 450,000
Cash in money market account 850,000
Treasury bill, purchased November 1,2019 maturing January 31,2020 4,500,000
Time deposit purchased December 1,2020 maturing March 31,2020 5,000,000

What amount should be reported as cash and cash equivalents on December 31,2019?
c. a. 5,800,000
b. 4,800,000
c. 1,300,000
d. 10,800,000

6. You are conducting an audit of the Pesto Company for the year ended December 31, 2020. The company’s internal
control procedures over cash were not adequate. Faye Nob, the bookkeeper-cashier, handles cash receipts, maintains
accounting records and prepares monthly reconciliations of the bank account.
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Faye Nob prepared the following reconciliation at the end of the year:

Balance per bank statement P1,050,000

Add: Deposit in transit P 525,750
Note collected by bank 45,000 570,750
Balance 1,620,750
Less: Outstanding Check 740,250
Balance per book P880,500

In the process of your audit you have gathered the following information:
a. At December 31, 2019 the balances of the bank and book showed P1,050,000 and P880,500, respectively.
b. The cut-off bank statement showed a bank charge on January 2, 2020 for 90,000 representing correction of an
erroneous bank credit
c. The list of outstanding checks are as follows:
1. Check payable to supplier, dated December 30, 2019 in the amount if P44,250, that will be released on
January 4, 2020
2. A check representing advance payment to a supplier in the amount of P111,630, the date of which is January
3,2020, and released in December 2019.
d. On December 31, 2019, the company received and recorded a customer’s postdated check in the amount of 150,000.

Compute for the adjusted cash balance to be shown in the statement of financial position at December 31, 2019
a. 931,380 c. 751,380
b. 796,380 d. 706,380

7. You noted the following composition of All Company’s “cash account” as of December 31, 2017 in connection with your
audit:
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, 2013) 1,500,000
Savings deposit in a closed bank 100,000
IOU from employee 20,000
Pension fund 3,000,000
Petty cash fund 10,000
Customer’s check dated January 1, 2013 50,000
Customer’s check outstanding for 18 months 40,000
Total P7, 760, 000
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Additional information follows:

a) Check of P200, 000 in payment of accounts payable was recorded on December 31, 2017 but mailed to suppliers on
January 5, 2013.
b) Check of P100, 000 dated January 15, 2013 in payment of accounts payable was recorded and mailed on December
31, 2017.
c) The company uses the calendar year. The cash receipts journal was held open until January 15, 2013, during which
time P400, 000 was collected and recorded on December 31, 2017.The cash and cash equivalents to be shown on the
December 31, 2017 balance sheet is
a. P3, 310,000
b. 1,910,000
c. P2, 910,000
d. P4, 410,000

8. In reconciling the book and bank balance of the cash account of Himalayas Corporation, you discover the following for
the month of December 2012:
Balance per bank statement………………………………………………… 400,000
Balance per books………………………………………………………………….387,000
Receipts not yet deposited……………………………………………………100,000
Bank service charge……………………………………………………………….1,000
Customer’s check returned by bank marked DAIF…………………22,000
A paid check for 40,000 was recorded in the cash book as 4,000. Assuming no other errors were noted, what is the
amount of the outstanding checks at December 31, 2012?
a. 172,000 c.350,000
b. 194,000 d. 328,000

9. Cash in bank- payroll account 2,000,000

Cash in bank- current account 5,000,000
Cash on hand 700,000
Cash in bank- restricted account 5,000,000
Time deposit, purchased December 31,2019 and due March 15, 2020 3,000,000

The cash on hand included a 500,000 check payable to other company, dated January 15, 2020. What total amount
should be reported as cash and cash equivalents on December 31, 2019?
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a. 10,200,000
b. 15,200,000
c. 11,200,000
d. None of the above

10. Lou Company reported cash and cash equivalents including the following data below:

Cash on hand 700,000

Demand deposit 7,000,000
Certificate of deposit 4,000,000
Postdated check 500,000
Petty Cash Fund 40,000
Traveler’s Check 400,000
Manager’s check 300,000
Money Order 300,000

What total amount should be reported as cash?

a. 12,740,000
b. 13,240,000
c. 8,740,000
d. 740,000

11. Burp Company had the following balances on December 31, 2019:

Cash in bank 3,000,000

Cash on hand 150,000
Cash restricted for addition to plant and expected to be disbursed n 2020 2,000,000

Cash in bank included Php 500,000 of compensating balance against short-term borrowing arrangement. It’s not legally
restricted as to withdrawal.

What total cash should be reported under current assets on December 31,2019?
a. 3,150,000
b. 3,000,000
c. 5,000,000
d. 5,150,000

12. Papsy Company had the following information on December 31,2019:

Cash on hand 600,000

Petty cash fund 40,000
Security Bank current account 1,500,000
BDO current account- First Bank 3,000,000
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BDO current account- Second Bank (overdraft) (200,000)

BSP treasury bill- 60 days 4,000,000

The cash on hand included a postdated check of a customer worth Php 125,000 and a postal money order of Php 50,000.
A check of Php 300,000 was drawn against Security Bank current account, January 15, 2019, delivered to the payee and
recorded December 31, 2019.

The total amount of cash and cash equivalent is

a. 9,115,000
b. 8,990,000
c. 8,815,000
d. 8,940,000

13. In connection with your audit of Moo Corporation for the year ended December 31, 2006, you gathered the following:
Current account at Metrobank P2,000,000
Current account at BPI (100,000)
Payroll account 500,000

Foreign bank account – restricted (in equivalent pesos) 1,000,000

Postage stamps 1,000
Employee’s post dated check 4,000
IOU from controller’s sister 10,000
Credit memo from a vendor for a purchase return 20,000
Traveler’s check 50,000
Not-sufficient-funds check 15,000
Money order 30,000
Petty cash fund (P4,000 in currency and expense
receipts for P6,000) 10,000
Treasury bills, due 3/31/07 (purchased 12/31/06) 200,000
Treasury bills, due 1/31/07 (purchased 1/1/06) 300,000

Based on the above information and the result of your audit, compute for the cash and cash
equivalent that would be reported on the December 31, 2006 balance sheet.
a. P2,784,000 c. P2,790,000
b. P3,084,000 d. P2,704,000

14. In the course of your audit of the Velo Corporation, its controller is attempting to determine
the amount of cash to be reported on its December 31, 2006 balance sheet.
The following information is provided:
1. Commercial savings account of P1,200,000 and a commercial checking account balance of P1,800,000
are held at PS Bank.
2. Travel advances of P360,000 for executive travel for the first quarter of the next year (employee to reimburse through
salary deduction)
3. A separate cash fund in the amount of P3,000,000 is restricted for the retirement of a long term debt.
4. Petty cash fund of P10,000.
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5. An I.O.U. from a company officer in the amount of P40,000.

6. A bank overdraft of P250,000 has occurred at one of the banks the company uses to deposit its cash receipts. At the
present time, the company has no deposits at this bank.
7. The company has two certificates of deposit, each totaling P1,000,000. These certificates of deposit have maturity of
120 days.
8. Velo has received a check dated January 2, 2007 in the amount of P150,000.
9. Velo has agreed to maintain a cash balance of P200,000 at all times at PS Bank to ensure future credit availability.
10. Currency and coin on hand amounted to P15,000.

Based on the above and the result of your audit, how much will be reported as cash and cash equivalent at December 31,
2006?
a. P3,025,000 c. P2,575,000
b. P2,825,000 d. P5,025,000

15. The accountant for the Helix Company assembled the following data:
June 30 July 31
Cash account balance P 15,822 P 39,745
Bank statement balance 107,082 137,817
Deposits in transit 8,201 12,880
Outstanding checks 27,718 30,112
Bank service charge 72 60
Collection by bank of company's notes receivable 71,815 80,900
Additional data:
Customer's check deposited July 10, returned by bank on July 16 marked NSF,
and redeposited immediately; no entry made on books for return or redeposit…………………………….. 8,250
The bank statements and the company's cash records show these totals:
Disbursements in July per bank statement P218,373
Cash receipts in July per Helix’ books 236,452

How much is the adjusted cash balance as of June 30?

a. P87,565 c. P107,082
b. (P3,695) d. P15,822

16. The following informations are available from the book of Nenita Company.
2015 2016
Net Income 2,500,000
Income received in advance 500 600
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Prepaid Expenses 1,600 1,400

Accounts Receivable 25,000 20,000
Accounts Payable 13,000 15,000
Outstanding expenses 2,500 2,000
Accrued Revenue 1,500 1,200
The net cash flow provided (used) by operating was
a. 2,492,900 c. 2,492,400
b. 2,493,500 d. 2,502,900

17. The books of Manila's Service, Inc. disclosed a cash balance of P687,570 on December 31, 2006. The bank
statement as of December 31 showed a balance of P547,800. Additional information that might be useful in reconciling
the two balances follows:
(a) Check number 748 for P30,000 was originally recorded on the books as P45,000.
(b) A customer's note dated September 25 was discounted on October 12. The note was dishonored
on December 29 (maturity date). The bank charged Manila's account for P142,650, including a protest fee of P2,650.
(c) The deposit of December 24 was recorded on the books as P28,950, but it was actually a deposit of P27,000.
(d) Outstanding checks totaled P98,850 as of December 31.
(e) There were bank service charges for December of P2,100 not yet recorded on the books.
(f) Manila's account had been charged on December 26 for a customer's NSF check for P12,960.
(g) Manila properly deposited P6,000 on December 3 that was not recorded by the bank.
(h) Receipts of December 31 for P134,250 were recorded by the bank on January 2.
(i) A bank memo stated that a customer's note for P45,000 and interest of P1,650 had been collected on December 27,
and the bank charged a P360 collection fee.

Based on the above and the result of your audit, determine the following:

1. Adjusted cash in bank balance

a. P583,200 c. P589,200
b. P577,200 d. P512,400

2. Net adjustment to cash as of December 31, 2006

a. P98,370 c. P104,370
b. P110,370 d. P175,170

18. You are trying to determine an apparent cash shortage that you believe resulted from an employee’s theft. You have
assembled the following information for the month of March:
Cash balance per books, March 1 ………………………………………… 115,963.70
Cash Receipts for March per books……………………………………….. 246,475.00
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Cash disbursements for March per books……………………………..… 334,709.10

Cash balance per bank statement, March 31………………………….…… 15,341.40
Deposit in transit, March 31………………………………………….………… 9,000.00
Outstanding checks, March 31………………………………………………… 2,703.80
Bank service charge for March…………………………………………..………… 92.00
What is the amount of cash shortage?
a. 27,637.60 c. 6,000.00
b. 21,637.60 d. 382,250.00

19. You were able to gather the following from the December 31, 2006 trial balance of Athalia Corporation in connection
with your audit of the company:

Cash on hand P 500,000

Petty cash fund 10,000
BPI current account 1,000,000
Security Bank current account No. 01 1,080,000
Security Bank current account No. 02 (80,000)
PNB savings account 1,200,000
PNB time deposit 500,000

Cash on hand includes the following items:

a. Customer’s check for P40,000 returned by bank on December 26, 2006 due to insufficient
fund but subsequently redeposited and cleared by the bank on January 8, 2007.
b. Customer’s check for P20,000 dated January 2, 2007, received on December 29, 2006.
c. Postal money orders received from customers, P30,000.

Included among the checks drawn by Athalia Corporation against the BPI current account and recorded in December
2006 are the following:
a. Check written and dated December 29, 2006 and delivered to payee on January 2, 2007, P80,000.
b. Check written on December 27, 2006, dated January 2, 2007, delivered to payee on December 29, 2006, P40,000.
The credit balance in the Security Bank current account No. 2 represents checks drawn in excess of the deposit balance.
These checks were still outstanding at December 31, 2006.
The savings account deposit in PNB has been set aside by the board of directors for acquisition of new equipment. This
account is expected to be disbursed in the next 3 months from the balance sheet date.
Cash and cash equivalents amount to
a. P2,917,200 c. P3,052,000
b. P3,074,900 d. P3,066,000
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20. On January 1, 2021, Mercado Company established a petty cash fund of P10,000. On December 31, 2021, the petty
cash fund was examined and found to have receipts and the documents for miscellaneous general expenses amounting
to P8,120. In addition, there was cash amounting to P1,500.

1. What is the amount of petty cash shortage or overage?

A. P380 overage B. P380 shortage C. P1,880 shortage D. P1,880 overage

2. What entry would be required to adjust the petty cash fund on December 31, 2021?

A. DR. Miscellaneous general expenses 8,120 CR. Cash short or over 380 CR. Petty cash fund 8,500
B. DR. Miscellaneous general expenses 8,120 CR. Cash short or over 380 CR. Petty cash fund 7,740
C. DR. Miscellaneous general expenses 8,120 CR. Petty cash fund 8,120
D. DR. Miscellaneous general expenses 8,500 CR. Cash short or over 380 CR. Petty cash fund 8,120

21. On December 31, 2018 Dimaunahan Company reported cash of P2,760,000 with the following details:

Cash in bank BDO checking account: 1,280,000

Cash in bank, BDO payroll fund: 625,000
Undeposited NSF check received from customer dated December 1,2018: 248,000
Undeposited collections: 2,320,000
Undeposited check from customer dated January 31, 2019: 235,000
Cash in foreign bank, restricted: 1,200,000
Cash in bank, BDO value added tax account: 415,000

What total amount should be reported as cash and cash equivalents on December 31,2018?
a. 4,225,000
b. 4,888,000
c. 4,640,000
d. 5,840,000
22. The information below relates to CHARLIE COMPANY’s cash in bank:
Balance per bank statement, December 31, 2022 P27,910
Collections recorded but not yet deposited in bank 1,950
NSF check – not recorded on books nor redeposited 2,000
Bank charges not recorded 40
Note collected by bank and not recorded on books 2,800
Outstanding checks 3,000

1. The cash balance in the books of Charmaine Company on December 31, 2022, is:
A. P26,020 C. P22,200 B.P32,100 D. P26,100
 20

23. The auditor for PAULA, INC. examined the petty cash fund immediately after the close of business, July 31, 2021, the
end of the company’s natural business year. The petty cash custodian presented the following during the count:
Currency P1,650
Petty cash vouchers:
Postage 420
Office supplies expense 900
Transportation expense 340
Computer repairs 800
Advances to office staff 1,500
A check drawn by Samantha, Inc.,
payable to the petty cash custodian 7,200
Postage stamps 300
An employee’s check, returned by bank, marked NSF 1,000
An envelope containing the currency of P1,890
for a gift for a retiring employee 1,890
16,000

The general ledger shows an imprest petty cash fund balance of P16,000.

1. How much is the petty cash shortage or overage?

A. P2,190 overage B. P2,190 shortage C. P1,890 shortage D. P1,890 overage
2. What is the adjusted balance of the petty cash fund at July 31, 2021?
A. P10,740 B. 3,540 C. P7,200 D. P8,850

24. Based on Grande Company audit on December 31, 2020, the following information acquired
Balance per book......................................................4,500,000
Outstanding checks.....................................................550,000
Bank fees............................................................................9,000
Notes of customers collected by bank..................1,200,000
Interest in notes of customer.........................................11,000
NSF checks........................................................................62,000

What will be the adjusted cash in bank in the year end?

a. 6,190,000
b. 5,090,000
c. 5,640,000
d. 3,360,000

25. Cash and Cash equivalents on the Statement of Financial PositionYour audit of the December 31, 2022, financial
statements of DIONISIO CORP. reveals the following:
Current account at Prime Bank P (30,000)
Current account at Prudent Bank 135,000
Treasury bills (acquired 3 months before maturity) 300,000
 21

Treasury bills (maturity date is Dec. 31, 2023) 1,500,000

Payroll account 390,000
Foreign bank account – restricted
(translated using the December 31, 2022, exchange rate) 2,000,000
Postage stamps 1,250
Employee’s postdated check 4,500
IOU from the vice-president 8,000
Credit memo from a supplier for a purchase return 8,100
Traveler’s check 21,000
Money order 12,900
Petty cash fund (3,000 in currency and expense receipts for P12,000) 15,000

What amount would be reported as “cash and cash equivalents” on the statement of financial position on
December 31, 2022?
A. P840,050 B. P873,900 C.P849,400 D.P861,900

26. The bank erroneously charged Tropical Hut Services’ account for $450.50 for a check that was correctly written and
recorded by Tropical Hut Services as $540.50. To reconcile the bank account of Tropical Hut Services at the end of the
month, you would:
A. add $90 to the cash balance according to the bank statement.
B. add $90 to the cash balance according to Tropical Hut Services’ records.
C. deduct $90 from the cash balance according to the bank statement.
D. deduct $90 from the cash balance according to Tropical Hut Services’ records.

27. The following data were accumulated for use in reconciling the bank account of Lakefront Co. for August:
1. Cash balance according to the company’s records at August 31, P31,080.
2. Cash balance according to the bank statement at August 31, P38,280.
3. Checks outstanding, P12,460.
4. Deposit in transit, not recorded by bank, P5,850.
5. A check for P180 in payment of an account was erroneously recorded in the check register as P810.
6. Bank debit memo for service charges, P40.

What is the amount of adjusted cash balance?

A.P 31,670
B. P 31,760
C. P 32,000
D.P 32,760

28. Issued a check to establish a petty cash fund of P1,150. The amount of cash in the petty cash fund is P250. Issued a
check to replenish the fund, based on the following summary of petty cash receipts: repair expense, P725 and
miscellaneous selling expense, P150. What is the amount of the cash short and over?

A. Cash short and over 20

B. Cash short and over 25
C. Cash short and over 30
D. None of the above
 22

29. The actual cash received from cash sales was P114,850, and the amount indicated by the cash register total was
P114,975. Journalize the entry to record the cash receipts and cash sales.

A. Debit cash P114,850, Debit cash short and over 125 and Credit sales P 114, 975
B. Debit sales P 114, 975, Debit cash short and over 125 and Credit cash P114,850
C. Debit cash P114,850, Debit sales P 114, 975 and Credit cash short and over 125
D. None of the above

30. Shar SanPed Company provided the following information on December 31,2018:
Cash on hand: 930,000
PNB current account no.1: 735,000
BDO account (overdraft): 25,000
BSP treasury bill – 60 days: 290,000
Money market placement: 570,000

The cash on hand includes the customer postdated check of 145,000

How much is the correct cash and cash equivalents?
a. 2,380,000
b. 2,525,000
c. 2,355,000
d. 2,090,000

31. Jairus Company had the following account balances on December 31, 2018:
Petty cash fund: 25,000
Cash in bank, current account: 1,220,000
Cash in bank, payroll account: 565,000
Cash in bank, sinking fund: 630,000
Cash on hand: 625,000
Cash on bank, restricted: 1,310,000

 The petty cash fund included an employee’s IOU amounting to 7,000

 The cash on hand included a 260,000 customer check payable to Jairus dated January 10,2019.
 The sinking fund is set aside to settle the bond payable that will be due on June 4,2019.
What is the total cash and cash equivalents to be reported on December 31,2018?
a. 1,803,000
b. 3,058,000
c. 2,433,000
d. 3,065,000

32. The following data was prepared by Eleven Company for the bank reconciliation of the month December 2018:
 23

Balance per bank statement: 2,800,000

Deposit in transit: 635,000
Bank service charge for December: 3,000
Outstanding checks: 795,000
NSF check: 125,000

What is the adjusted cash in bank?

a. 3,240,000
b. 2,765,000
c. 2,640,000
d. 2,637,000

33. The cash account for Remedy Medical Co. at April 30, 2020, indicated a balance of P18,885. The bank statement
indicated a balance of P23,775 on April 30, 2020. Comparing the bank statement and the accompanying canceled checks
and memos with the records revealed the following reconciling items:
a. Checks outstanding totaled P7,840.
b. A deposit of P3,580, representing receipts of April 30, had been made too late to appear on the bank
statement.
c. The bank collected P3,780 on a note left for collection. The face of note was P3,600.
d. A check for P770 returned with the statement had been incorrectly recorded by Remedy Medical Co. as P700.
The check was for the payment of an obligation to Copelin Co. for a purchase on account.
e. A check drawn for P330 had been erroneously charged by the bank as P3,300.
f. Bank service charges for April amounted to P110.

What is the amount of adjusted cash balance?

A. P 22,495
B. P 23,451
C. P 63,824
D. P 22,485

34. The Cadbury Company reported a cash account balance of 7,290,000 at the end of the month. The bank statement did
not include a deposit of 255,000 made on the last day of the month. The bank statement showed a collection by the bank
of 125,000 for the depositor and a customer check of 320,000 returned because it was NSF. A customer check for 59,000
was recorded by the depositor as 95,000 and a check written for 25,000 was recorded as 52,000.
What amount should be reported as cash in bank?
a. 7,086,000
b. 7,341,000
c. 7,406,000
d. 7,104,000

35. Jose Inc. provided the following information on December 31, 2020:
Petty Cash Fund 17,000
 24

Current Account- PNB 1,500,000

Current Account- BDO (Overdraft) ( 700,000)
Money Market Placement (Security Bank) 2,000,000
Time Deposit (BPI) 350,000

a. A check for P200,000 was drawn against PNB current account dated December 31,2020 but delivered to payee on
January 15,2019
b. The BPI time deposit is set aside for the acquisition of equipment
What amount should be reported as cash and cash equivalents on December 31,2018?
a. 3, 717,000 c. 2,817,000
b. 3,167,000 d. 2,617,000

36. At year-end, Lyra Company reported cash and cash equivalents which compromised the following:
Cash on hand 640,000
Demand Deposit 3,000,000
Certificate of Deposit 2,400,000
Postdated customer check 250,000
Petty cash fund 45,000
Traveler’s check 200,000
Manager’s check 155,000
Money Order 75,000
What total amount should be reported as cash at year end?
a. 6,515,000 c. 4,365,000
b. 4,115,000 d. 3,685,000

37. Bruno Corporation had the following account balances at year-end:

Cash in bank 3,250,000
Cash on hand 165,000
Cash restricted for addition to plant and expected
to be disbursed next year 1,700,000
Cash in bank included P500,000 compensating balance against short-term borrowing arrangement. The compensating
balance is legally restricted for withdrawal.
a. 3,415,000 c. 2,951,000
b. 3,451,000 d. 2,915,000

38. JM Company reported the following information at December 31, 2019

 25

 Share investments of P400,000 actively traded in the market

 Government treasury bills of P4,000,000 with a 5-year term but purchased on December 31 at which
time they had two months to go until maturity
 Cash in bank P2,300,000, savings account
 Commercial papers of P2,700,000 with term of ten months but purchased on December 31 at which
time they had three months before maturity.
What are the total cash equivalents?
a. 2,300,000 c. 7,100,000
b. 6,700,000 d. 9,400,000

39. A chemical company has net sales of 50,000 cash expenses (including taxes) of 3,500and depreciation expenses of
5,000. If debtors decrease over the period by 6,000, what is its cash from operations?
a. 47,500 c. 57,500
b. 52,500 d. 46,500

40. In preparing its cash flow statement for the year ended December 31, 2018, Quising Inc. collected the following data:
Amortization of bond discount 2,500; Purchases of Areniego Co. bonds (par value 220,000)(200,000); Gain on sale of
equipment (8000); Proceeds from sale of equipment 16,000; Dividends declared (45,000), Dividends paid (36,000);
Proceeds from salw of treasury stock (carrying amount 60,000) 70,000.
In its December 31,2018 statement of cash flows,
1. What amount should Quising report as net casg used in investing activities?
a. 184,000 c. 181,000
b. 190,000 d. 216,000
2. What amount should Quising report as net cash provided by financing activities?
a. 24,000 c. 25,000
b. 34,000 d. 31,000

41. The Bibi Co. provides the following information about its activities in the year 2018.
Marketable securities purchased: 45,000
Treasury stock purchased: 56,000
Inventory purchased: 412,000
Land sold: 95,000
Machinery purchased: 278,000
Common stock issued: 168,000
 26

Compute net cash provided/used by investing activities to be reported in the statement of cash flows of Bibi Co.
a. 274,000 c. 183,000
b. 228,000 d. 442,000

42. My Company reported a net income of 6000. Depreciation expense was 22,000. The following working capital accounts
changed:
Accounts Receivable 9,000 increase
Inventory 7,600 increase
Non-trade note payable 14,000 increase
Non-trading equity investment 18,000 increase
Accounts Payable 13,900 increase
If My uses IFRS reporting and the indirect method, what is the cash provided by operating activities?
a. 97,300 c. 79,300
b. 111,300 d. 94,500

43. Petty cash fund has the amount of 500. It includes cash of 350 and 100 receipts in disbursements when replenished.
What will be the amount of shortage in this problem?
a. 100
b. 25
c. 50
d. 150

44. Dobby Company's cash accounts showed a balance of 130,000 before reconciling. Based on the bank statement they
did not include the deposit made on the last day of the month amounting to 75,000 and it also shows that the bank collect
13,000. Instead of recording 87 to customer's check, it was recorded for 78. NSF check for 2,000 because of a customer's
check.
The balance in the cash account should be
a. 140,991
b. 135,900
c. 140,000
d. none of the above
 27

45. Dali Company has a following account balance in December 31, 2020:
Cash on hand.............................................................3,000,000
Cash in bank...............................................................4,500,000
Petty Cash Fund.............................................................500,000
Post stamps unused..................................................3,300,000
Post dated check.......................................................1,200,000
Commercial Paper with maturity of 3mos...............400,000
What amount would be reported as cash and cash equivalent in December 31, 2020:
a. 9,600,000
b. 8,000,000
c. 12,900,000
d. 8,400,000

46. In the course of your audit of the Sana Corporation, its controller is attempting to determine the amount of cash to be
reported on its December 31, 2017 balance sheet. The following information is provided:
a. Commercial savings account of P1, 200,000 and a commercial checking account balance of P1, 800,000 are held at
PS Bank.
b. Travel advances of P360, 000 for executive travel for the first quarter of the next year (employee to reimburse through
salary deduction).
c. A separate cash fund in the amount of P3, 000,000 is restricted for the retirement of a long term debt.
d. Petty cash fund of P10, 000.
e. An I.O.U. from a company officer in the amount of P40, 000.
f. A bank overdraft of P250, 000 has occurred at one of the banks the company uses to deposit its time, the cash receipts.
At the present company has no deposits at this bank.
g. The company has two certificates of deposit, each totaling P1, 000,000. These certificates of deposit have maturity of
120 days.
h. Las Conde has received a check dated January 2, 2013 in the amount of P150, 000.
i. Las Conde has agreed to maintain a cash balance of P200, 000 at all times at PS Bank to ensure future credit
availability.
j. Currency and coin on hand amounted to P15, 000.

Based on the above and the result of your audit, how much will be reported as cash and cash equivalent at December
31, 2017?
 28

a. P2, 075,000
b. P3, 025,000
c. P2, 825,000
d. P5, 025,000

47. All For One Company provided the bank statement for the month of December which included the following
information:
Ending balance, December 31 2,800,000
Bank service charge for December 12,000
Interest paid by bank to Emily Company for December 10,000
In comparing the bank statement to its own cash records, the entity found the following:
Deposits made but not yet recorded by the bank 350,000
Checks written and mailed but not yet recorded by the bank 650,000
In addition, the entity discovered that it had drawn and erroneously recorded a check for P46, 000 that should have been
recorded for P64, 000.
What is the cash balance per ledger on December 31?
a. 2,500,000
b. 2,800,000
c. 2,520,000
d. 2,540,000

48. On June 30, 2013, the bank statement of Liam Company had an ending balance of P3, 735,000. The following data
were assembled on the course of reconciling the bank balance:

 The bank erroneously credited Liam Company for P21,000 on June 22

 During the month, the bank charged back NSF checks amounting to P23,000of which P8,000 had been
redeposited by June 25
 Collection for June 30 totaling P103,000 was deposited the following month
 Checks outstanding on June 30 amounted to P302,000
 Note collected by the bank for Liam Company was P80, 000 and the corresponding bank charge was P5,000.

What is the unadjusted cash in bank per ledger on June 30, 2013?
a. 3,515,000
 29

b. 3,557,000
c. 3,455,000
d. 3,497,000

49. The cash account of the Moniegold Inc. as of December 31, 2017 consists of the following:
On deposit in current account with Real Bank P 900,000
Cash collection not yet deposited to the bank 350,000
A customer’s check returned by the bank for insufficient Fund 150,000
A check drawn by the Vice-President of the Corporation dated January 15, 2013 70,000
A check drawn by a supplier dated December 28, 2017 for goods returned by the
Corporation 60,000
A check dated May 31, 2017 drawn by the Corporation against the
Piggy Bank in payment of customs duties. Since the
importation did not materialize, the check was returned by the
customs broker. This check was an outstanding check in the reconciliation of the
Piggy Bank account ` 410,000
Petty Cash fund of which P5,000 is in currency; P3,600 in
form of employees’ I.O.U. s; and
P1,400 is supported by approved petty cash vouchers for expenses all
dated prior to closing of the books on December 31, 2017 10,000
Total P1, 950,000
Less: Overdraft with Piggy Bank secured by a Chattel (300,000)
Balance per ledger P1, 650,000
At what amount will the account “Cash” appear on the December 31, 2017 balance sheet?
a. P1, 425,000
b. P1, 495,000
c. P1, 315,000
d. P1, 725,000