REVIEW SESSION 1 QUIZ P.M.G.

Clamor
Cash and Cash Equivalents | Bank Reconcilation | Biological Assets August 24, 2011

A. THEORY

1. To be reported as part of cash and cash equivalents, the cash and cash equivalent must be:
a. Unrestricted in use for current operations
b. Available for the purchase of property, plant and equipment
c. Set aside for liquidation of long-term debt
d. Deposited by bank

2. All of the following can be classified as cash and cash equivalents, except:
a. Redeemable preference shares acquired and due in 60 days
b. Commercial paper held and due for repayment in 90 days
c. Equity instrument
d. Bank overdraft

3. If material, deposits in foreign bank which are subject to foreign exchange restriction shall be
classified
a. Separately as current asset with appropriate disclosure
b. Separately as non-current asset with appropriate disclosure
c. Separately as current asset without appropriate disclosure
d. Separately as non-current asset without appropriate disclosure

4. Which is not considered as a cash equivalent?

a. A three-year treasury note maturing on October 30, 2011 purchased by the entity on
September 15, 2011
b. A three-year treasury note maturing on October 30, 2011 purchased by the entity on
June 30, 2011.
c. A 90-day treasury bill
d. A 60-day money-market placement

5. Which item should be excluded from cash and cash equivalents in the current year-end statement
of financial position?
a. The minimum cash balance in the entity’s current account which is maintained to avoid
service charges
b. A check issued by the entity on December 27, 2011 but dated January 15, 2012.
c. Time deposit which matures in one year
d. A customer’s check denominated in a foreign currency.

6. At the end of the current year, an entity had various checks and papers in its safe. Which item
should not be included in its cash account in the current year-end statement of financial position?
a. € 30,000 cash in current account.
b. Past promissory note issued in favor of the entity by its President
c. Another entity’s P225,000 check payable to the entity dated December 15, 2011
d. The entity’s undelivered check payable to a supplier dated December 31, 2011

7. Unreleased checks, which are checks drawn before the end of reporting period but held for later
delivery to creditors
a. Shall be treated as outstanding checks
b. Shall be restored to the cash balance
c. Shall be treated as outstanding checks if the date is shortly after the end of reporting
period.
d. Shall be treated as outstanding checks if they are ultimately encashed

8. The petty cash fund account under the imprest fund system is debited
a. Only when the fund is created
b. When the fund is created and everytime it is replenished
c. When the fund is created and when the size of the fund is increased
d. When the fund is created and when the size of the fund is decreased

9. When a petty cash fund is used, which of the following is true?

a. The balance of the petty cash fund should be reporting in the statement of financial
position as a long-term investment
b. The petty cashier’s summary of petty cash payments serves as a journal entry that is
posted to the appropriate general ledger account
c. The reimbursement of the petty cash fund should be credited to the cash account
d. Entries that include a credit to the cash account should be recorded at the time the
payments from the petty cash fund are made.

10. A cash short or over account

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REVIEW SESSION 1 QUIZ P.M.G. Clamor
Cash and Cash Equivalents | Bank Reconcilation | Biological Assets August 24, 2011

a. Is not generally accepted

b. Is debited when the petty cash fund proves out over
c. Is debited when the petty cash fund proves out short
d. Is a contra account for cash

11. Which of the following statements in relation to the cash short or over account is true?
a. It would be impossible to have cash shortage or overage if employees were paid in cash
rather than by check
b. The entry to account for daily cash sales for which a small amount of cash shortage
existed would include a debit to cash short or over account
c. If the cash short or over account has a debit balance at the end of the period it must be
debited to an expense account
d. A credit balance in a cash shorty or over account should be considered a liability because
the short changed customer will demand return of this amount.

12. 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

13. Which of the following statements is false?

a. A certified check is a liability of the bank certifying it
b. A certified check will be accepted by many persons who would not otherwise accept a
personal check
c. A certified check is one drawn by a bank upon itself
d. A certified check should not be included in the outstanding checks

14. Which is false concerning measurement of cash and cash equivalents?

a. Cash is measured at face value
b. Cash in foreign currency is measured at the current exchange rate
c. If bank or financial institution holding the funds of company is in bankruptcy or financial
difficulty, cash is written down at estimated realizable value
d. Cash equivalents is measured at maturity value, meaning face value plus interest

15. Bank overdraft

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

16. Which of the following items must be added to the cash balance per ledger in preparing a bank
reconciliation which ends with adjusted cash balance?
a. Note 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 debit

17. In preparing a monthly bank reconciliation, which of the following items would be added to the
balance per bank statement to arrive at the correct cash balance?
a. Outstanding checks
b. Bank service charge
c. Deposits in transit
d. Customer’s not collected by bank on behalf of depositor

18. Which will not require an adjusting entry on the depositor’s books?
a. NSF check from depositor
b. Check in payment of accounts payable amounting to P100,000 is recorded by depositor
as P10,000
c. Deposit of another entity is credited to account of depositor
d. Bank service charge

19. Bank statements provide information about all of the following, except
a. Checks cleared during the period
b. NSF checks
c. Bank charges for the period

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REVIEW SESSION 1 QUIZ P.M.G. Clamor
Cash and Cash Equivalents | Bank Reconcilation | Biological Assets August 24, 2011

d. Errors made by depositor

20. If the cash balance shown on entity’s accounting records 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 bank but not yet recorded by entity
b. Deposits in transit
c. Outstanding checks
d. Bank charges not yet recorded by entity

21. If the cash balance shown on entity’s 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 bank but not yet recorded by entity
b. Deposits in transit
c. Outstanding checks
d. Bank charges not yet recorded by entity

22. A bank reconciliation is

a. A formal financial statement that lists all of the bank account balances of an entity
b. A merger of two banks that previously were competitors
c. A statement sent by the bank to depositor on a monthly basis
d. A schedule that accounts for the differences between entity’s cash balance shown in the
bank statement and cash balance shown in its ledger.

23. 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 of depositor 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 transits

24. In preparing a bank reconciliation, interest paid by the bank on the account is
a. Added to bank balance
b. Subtracted to bank balance
c. Added to book balance
d. Subtracted to book balance

25. Which of the following must be deducted from the bank statement balance in preparing a bank
reconciliation which ends with adjusted cash balance?
a. Deposit in transit
b. Outstanding checks
c. Reduction of loan charged to account of depositor
d. Certified checks

26. It is the management by entity of biological transformation and harvest of biological assets for
sale or conversion into agricultural produce or into additional biological asset
a. Agricultural activity
b. Biological activity
c. Economic activity
d. Development activity

27. Agricultural produce is measured at

a. Fair value
b. Fair value less cost to sell
c. Fair value less cost to sell at the point of harvest
d. Net realizable value\

28. Statement 1 – In all cases, entity shall measure agricultural produce at the point of harvest at fair
value less cost to sell
Statement 2 – PAS 41 (Agriculture) reflects the view that fair value of agricultural produce at the
point of harvest can always be measured reliably

Which of the following statements in relation to agricultural produce is correct?

a. Statement 1 only
b. Statement 2 only
c. Both statements are correct
d. Neither statements are correct

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REVIEW SESSION 1 QUIZ P.M.G. Clamor
Cash and Cash Equivalents | Bank Reconcilation | Biological Assets August 24, 2011

29. Generally speaking, biological assets relating to agricultural activity shall be measured using
a. Historical cost
b. Historical cost less depreciation less impairment
c. Fair value approach
d. Net realizable value

30. When the fair value of biological asset cannot be measured reliably, the biological asset shall be
measured at
a. Cost of asset
b. Cost less accumulated depreciation
c. Cost less accumulated depreciation and accumulated impairment losses
d. Net realizable value

31. Which of the following costs should not be including in cost to sell?
a. Commissions to brokers and dealers
b. Levies by regulatory agencies
c. Transfer taxes and duties
d. Transport costs

32. Where there is a long aging or maturation process after harvest, the accounting for such products
shall be dealt with by
a. PAS 41 (Agriculture)
b. PAS 2 (Inventories)
c. PAS 16 (Property, plant and equipment)
d. PAS 40 (Investment property)

33. Which of the following is unlikely to be used in fair value measurement?

a. Quoted price in a market
b. Recent market transaction price
c. Present value of expected net cash flows from asset
d. External independent valuation

34. A gain or loss arising on the initial recognition of biological assets and from a change in fair value
less cost to sell of biological assers shall be included in
a. The profit or loss from the period
b. Other comprehensive income
c. A separate revaluation reserve
d. A capital reserve within equity

35. All of the following criteria must be satisfied before a biological asset can be recognized in an
entity’s financial statements, except
a. The entity controls the asset as a result of past event
b. It is probable that future economic benefits relating to the asset will flow to the entity
c. An active market for the asset exists
d. The fair value or cost of asset can be measured realiably

B. PROBLEMS

1. The following data pertain to Clamor Company on December 31, 2011:

Checkbook balance 3,000,000
Bank statement balance 3,750,000
Check drawn on Clamor Company, payable to
supplier dated December 31, 2011 but
mailed on January 15, 2012 375,000
Cash in sinking fund 1,500,000

On December 31, 2011, how much should be reported as cash under current assets?
a. 3,375,000
b. 4,125,000
c. 2,675,000
d. 4,875,000

2. Bermal Company had the following account balances on December 31, 2011:
Cash in bank – current account 1,250,000
Cash in bank – payroll account 250,000
Cash on hand 125,000

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REVIEW SESSION 1 QUIZ P.M.G. Clamor
Cash and Cash Equivalents | Bank Reconcilation | Biological Assets August 24, 2011

Cash in bank – restricted account for building

construction expected to be disbursed in
2012 750,000
Time deposit, purchased December 15, 2011 and
due March 15, 2012 500,000

The cash on hand includes a P50,000 check payable to Bermal Company, dated January 15,
2012. What should be reported as cash and cash equivalents on December 31, 2011?
a. 1,575,000
b. 2,075,000
c. 1,625,000
d. 2,175,000

3. Cabanado Company had the following account balances on December 31, 2011:
Cash in bank 4,500,000
Cash on hand 250,000
Cash restricted for addition to plant expected
to be disbursed in 2012 3,200,000

Cash in bank includes P1,200,000 of compensating balance against short-term borrowing

arrangement. The compensating balance is not legally restricted as to withdrawal by Cabanado
Company.

In the December 31, 2011 statement of financial position, what total cash should be reported
under current assets?
a. 3,550,000
b. 4,500,000
c. 4,750,000
d. 7,950,000

4. The cash account in Dee Company’s ledger showed a balance at December 31, 2011 of
P2,207,500, which consisted of the following:
Petty cash fund 12,000
Undeposited receipts, including a postdated
check for P35,000 610,000
Cash per bank statement, with a check for
P20,000 still outstanding 1,122,500
Bond sinking fund 425,000
Vouchers paid out of collections, not yet recorded 21,500
IOUs signed by employees, taken from collections 16,500

At what amount should cash be reported in the December 31, 2011 statement of financial
position?
a. 1,689,500
b. 1,709,500
c. 1,744,500
d. 1,724,500

5. The checkbook balance of Espiritu Company on December 31, 2011 was P6,000,000. Data about
certain cash items follow:
 Customer check amounting to P300,000 dated January 2, 2012 was included in the
December 31, 2011 checkbook balance
 Another customer check for P750,000 deposited on December 22, 2011 was included in
its checkbook balance but returned by bank because it was marked as NSF check. The
check was redeposited on December 26, 2011 and cleared two days later
 P600,000 check payable to supplier dated and recoreded on December 30, 2011 was
mailed on January 16, 2012.
 Petty cash fund of P75,000 with the following summary on December 31, 2011
Currency and coin 7,500
Petty cash vouchers 64,500
Return value of 20 cases of softdrinks 3,000
 Check of P64,500 was drawn on December 31, 2011 payable to petty cash.

What is the cash balance on December 31, 2011?

a. 6,372,000
b. 6,300,000
c. 6,307,500
d. 5,622,000

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REVIEW SESSION 1 QUIZ P.M.G. Clamor
Cash and Cash Equivalents | Bank Reconcilation | Biological Assets August 24, 2011

6. Account of the petty cash fund of Go Company showed its composition as follows:
Currency and coin 16,500
Paid vouchers
Transportation 3,000
Gasoline 2,000
Office supplies 2,500
Postage stamps 1,500
Due from employees 6,000 15,000
Customer’s check returned by bank and marked NSF 5,000
Check drawn by entity to the order of the petty cash custodial 13,500

What is the correct amount of petty cash fund for statement presentation purposes?
a. 50,000
b. 35,000
c. 30,000
d. 45,000

7. The December 31, 2011 trial balance of Macarilay Company includes the following accounts:
Petty cash fund 12,500
Current account – PNB 1,000,000
Current account – Allied (overdraft) (62,500)
Money market placement – BPI 250,000
Time deposit – Metrobank 500,000

The petty cash fund includes unreplenished December 2011 petty cash expense vouchers for
P3,750 and an employee check for P1,250 dated January 31, 2012.

A check for P25,000 was drawn against PNB current account dated and recorded December 29,
2011 but mailed to payee on January 15, 2012.

The Metrobank time deposit is set aside for land acquisition in early 2012.

What amount should be reported as cash and cash equivalents on December 31, 2011?
a. 1,282,500
b. 1,287,500
c. 1,032,500
d. 1,220,000

8. Nacario Company’s checkbook balance on December 31, 2011 was P2,000,000. In addition,
Nacario held the following items in its sage on that date:
 Check payable to Nacario, dated January 2, 2011 in
payment of a sale made in December 2010,
not included in December 31 book balance 800,000
 Check payable to Nacario, deposited January 15,
and including in December 31 book balance,
but returned by bank on December 30
stamped NSF. The check was redeposited
on January 2, 2012 and cleared a week later. 200,000
 Check drawn on Nacario’s account, payable to vendor,
Dated on December 31, 2011, but not yet
Mailed until January 10, 2012. 120,000

What is the amount to be reported as cash in December 31, 2011?

a. 1,920,000
b. 2,120,000
c. 2,600,000
d. 2,720,000

9. In preparing its bank reconciliation on December 31, 2011, Suaybaguio Company has made
available the following data:
Balance per bank statement 1,900,000
Deposit in transit 260,000
Amount erroneously credited by bank to
Suaybaguio’s account 20,000
Bank service charge 2,500
Outstanding checks 337,500

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REVIEW SESSION 1 QUIZ P.M.G. Clamor
Cash and Cash Equivalents | Bank Reconcilation | Biological Assets August 24, 2011

What is the adjusted cash in bank on December 31, 2011?

a. 1,842,500
b. 1,822,500
c. 1,800,000
d. 1,802,500

10. In an audit of Talampas Company on December 31, 2011, the following data are gathered:
Balance per book 2,000,000
Bank charges 6,000
Outstanding checks 470,000
Deposit in transit 600,000
Customer note collected by bank 750,000
Interest on customer note 30,000
Customer check returned NSF 124,000
Depositor’s note charged to account 500,000

What is the adjusted cash in bank on December 31, 2011?

a. 3,150,000
b. 2,130,000
c. 2,150,000
d. 2,650,000

11. In preparing its October 31, 2011 bank reconciliation, ABC Company has made available the
following information:
Balance per bank statement 3,610,000
Deposit in transit 650,000
Return of customer’s check for insufficient fund 120,000
Outstanding checks 550,000
Bank service charge for October 20,000

On October 31, 2011, what is the amount of cash per ledger?

a. 3,710,000
b. 3,590,000
c. 3,570,000
d. 3,510,000

12. DEF Company provided the following data for the purpose of reconciling the cash balance per
book with the balance per bank statement on December 31, 2011
Balance per bank statement 1,000,000
Outstanding checks (including certified checks of
P50,000) 250,000
Deposit in transit 100,000
December NSF checks (of which P25,000 had been
redeposited and cleared on December 27) 75,000
Erroneous credit to DEF’s account, representing
proceeds of loan granted to another
company 150,000
Proceeds of note collected by bank for DEF,
Including service charge of P10,000 385,000

What is the cash in bank to be reported in the December 31, 2011 statement of financial position?
a. 750,000
b. 700,000
c. 900,000
d. 725,000

13. On November 30, 2011, GHI Company received its bank statement. However, the closing
balance of the account was unreadable. Attempts to contact the bank after hours did not secure
the desired information. The following data are available in preparing a bank reconciliation:
October 31 book balance 146,000
Note collected by bank 10,000
Interest earned on note 1,000
NSF check of customer 13,000
Bank service charge on NSF check 200
Other bank service charges 300
Outstanding checks 20,200
Deposit of October 31 placed in night depositry 8,500
Check issued by JKL Company charged to GHI Co. 2,000

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REVIEW SESSION 1 QUIZ P.M.G. Clamor
Cash and Cash Equivalents | Bank Reconcilation | Biological Assets August 24, 2011

What is the cash balance per bank statement?

a. 143,500
b. 153,200
c. 133,800
d. 155,700

14. On December 31, 2011, the bank statement on MNO Company had an ending balance of
P747,000. The following data were assembled in the course of reconciling the bank balance:
 The bank erroneously credited MNO Company for P4,200 on December 23.
 During the month, the bank charged back NSF checks amounting to P4,600 of which
P1,600 had been redeposited by December 27.
 Collection for December 31 totaling P20,600 was deposited on January 2, 2012.
 Checks outstanding on December 31 amounted to P60,400.
 Note collected by the bank for MNO Company was P16,000 and the corresponding bank
charge was P1,000.

What is the unadjusted cash in bank per ledger on December 31, 2011?
a. 703,000
b. 711,400
c. 691,000
d. 699,400

For Problems 15 to 17

Reconcilation of PQRS Company’s bank account at October 31, 2011 is

Balance per bank statement 3,150,000

Deposits outstanding 450,000
Checks outstanding (45,000)
Correct cash balance 3,555,000

Balance per book 3,558,000

Bank service charge (3,000)
Correct cash balance 3,555,000

November 30, 2011 data are as follows:

Bank Book
Checks recorded 3,450,000 3,540,000
Deposits recorded 2,430,000 2,700,000
Collection by bank (P600,000 plus interest) 630,000
NSF check returned with November 30 statement 15,000
Balances 2,745,000 2,715,000

15. How much is the deposits in transit on November 30?

a. 720,000
b. 180,000
c. 270,000
d. 1,020,000

16. How much is the outstanding checks on November 30?

a. 45,000
b. 135,000
c. 90,000
d. 0

17. What is the adjusted cash in bank on November 30?

a. 2,715,000
b. 3,330,000
c. 3,360,000
d. 4,170,000

For Problems 18 to 20

TUV Company has a herd of ten 2 year old sheep on January 1, 2011. One shell aged 2 ½ years was
purchase on July 1, 2011 for P108 and one sheep was born on July 1, 2011. No animals were sold or
disposed during the year. The fair value less cost ot sell per unit is as follows:

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REVIEW SESSION 1 QUIZ P.M.G. Clamor
Cash and Cash Equivalents | Bank Reconcilation | Biological Assets August 24, 2011

2 years old sheep, January 1 100

2 ½ years old sheep, July 1 108
New born sheep, July 1 70
2 years old sheep, December 31 105
2 ½ years old sheep, December 31 111
New born sheep, December 31 72
3 years old sheep, December 31 120
½ years old sheep, December 31 80

18. What is the fair value of the biological assets on December 31, 2011?
a. 1,400
b. 1,320
c. 1,440
d. 1,360

19. What is the gain from change in fair value of biological assets that should be recognized in 2010?
a. 222
b. 292
c. 300
d. 332

20. What is the gain from change in fair value due to price change?
a. 292
b. 222
c. 237
d. 55

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REVIEW SESSION 1 QUIZ P.M.G. Clamor
Cash and Cash Equivalents | Bank Reconcilation | Biological Assets August 24, 2011

Student Number
Name of Student
Section
Theory Problems
A B C D A B C D

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2 2 
3 3 
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10 10 
11 11 
12 12 
13 13 
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