Cash Cash Equivalents Ia 1 2020 Edition

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Chapter 2
Cash and Cash Equivalents
NAME: Date:
Professor: Section: Score:
QUIZ:
1. Bank overdrafts that cannot be offset should be

a. reported as a deduction from the current asset section.
b. reported as a deduction from cash.
c. netted against cash and a net cash amount reported.
d. reported as a current liability.
2. Coins, currencies, checks, money orders, money on deposit, and cash funds that are available for
unrestricted use in current operations are disclosed in the notes to the financial statements as
a. Cash.
b. Cash equivalents.
c. Investments.
d. Accounts receivable.
3. These are short-term, highly liquid investments that are so near their maturity that they represent
insignificant risk of changes in value due to changes in interest rates.
a. Cash and Cash equivalents
b. Treasury bills
c. Treasury notes
d. Cash equivalents
4. Cash in foreign currency is valued at

a. face value.
b. current exchange rate.
c. current exchange rate reduced by an allowance for expected decline in peso.
d. estimated realizable value.
5. 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.
6. Noise Co. had the following balances on December 31, 20x1:
Cash in checking account ₱35,000

Cash in money market account 75,000
Treasury bill, purchased 11/1/20x1, maturing 1/31/20x2 350,000
Treasury bill, purchased 12/1/20x1, maturing 3/31/20x2 400,000
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What amount should Noise Co. report as cash and cash equivalents in its December 31, 20x1 statement of
financial position?
a. 110,000 c. 460,000
b. 385,000 d. 860,000
7. The records of Kapiz Co. show the following balances on December 31, 20x1:
Cash on hand ₱ 400,000

Cash in Bank – current account 1,200,000
Cash in Bank – peso savings deposit 5,000,000
Cash in Bank – dollar deposit (unrestricted) $ 100,000
Cash in Bank – dollar deposit (restricted) 250,000
Cash in 3-month money-market account ₱ 500,000
3-month unrestricted time deposit $ 20,000
Treasury bill, purchased 11/1/20x1, maturing 2/14/20x2 ₱1,600,000
Treasury bond, purchased 3/1/20x1, maturing 2/28/20x2 1,000,000
Treasury note, purchased 12/1/20x1, maturing 2/28/20x2 400,000
Unused Credit Line 4,000,000
Redeemable preference shares, purchased 12/1/20x1, due on 3/1/20x2 740,000
Treasury shares, purchased 12/1/20x1, to be reissued on 1/5/20x2 200,000
Sinking fund 400,000
Additional information:
 Cash on hand includes a ₱40,000 check payable to Kapiz Co. dated December 29, 20x1.
 During December 20x0, check amounting to ₱30,000 was drawn against the Cash in bank - current account
in payment of accounts payable. The check remains outstanding as of December 31, 20x1.
 The Cash in Bank – peso savings deposit includes ₱800,000 security bond on a pending labor case, in favor of
a previous employee. The establishment of the bond is mandated by a court of law.
 The Cash in Bank – peso savings deposit also includes a compensating balance amounting to ₱500,000 which
is not legally restricted.
 The Cash in Bank – dollar deposit (unrestricted) account includes interest of $4,000, net of tax, directly
credited to Kapiz Co.’s account. The exchange rate at year-end is $1 is to ₱45.
How much is the cash and cash equivalents to be reported in the 20x1 financial statements?
a. 14,720,000 c. 12,430,000
b. 19,520,000 d. 12,870,000
8. The information below was taken from the bank transfer schedule prepared during the audit of Fox
Co.’s financial statements for the year ended December 31, 2001. Assume all checks are dated and issued
on December 30, 2001.
Bank Accounts Disbursement date Receipt date

Check # From To Per books Per bank Per books Per bank
101 National Federal Dec. 30 Jan. 4 Dec. 30 Jan. 3
202 County State Jan. 3 Jan. 2 Dec. 30 Dec. 31
303 Federal American Dec. 31 Jan. 3 Jan. 2 Jan. 2
404 State Republic Jan. 2 Jan. 2 Jan. 2 Dec. 31
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Which of the following checks might indicate kiting?

a. #101 and #303.
b. #202 and #404
c. #101 and #404
d. #202 and #303
9. The following were the transactions involving an entity’s petty cash fund during the period.
July. 1, 20x1 Established ₱30,000 petty cash fund.

July 1 through Disbursements:
21, 20x1 - Office supplies expense ₱4,200
- Transportation expenses 10,500
- Repairs and maintenance 3,000
- Miscellaneous expense 9,000
Total ₱26,700
July 22, 20x1 Total coins and currencies in the petty cash box is ₱1,500. Replenishment is made.
The petty cash fund is not replenished and financial statements are prepared on July 31, 20x1. The month-
end adjustment to the petty cash fund would not include a
a. debit to receivable from custodian for ₱1,800.
b. credit to petty cash fund for ₱28,500.
c. total debits to various expense accounts for ₱26,700.
d. credit to cash in bank for ₱28,500.
10. On December 31, 20x1, the petty cash fund of Kristelle Co. with a general leger balance of ₱15,000
comprises the following:
Coins and currencies 2,550

Petty cash vouchers:
Gasoline for delivery equipment 3,000
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 replenish the fund on December 31, 20x1 includes a

a. credit to cash shortage or overage for ₱2,910.
b. debit to cash shortage or overage for ₱2,910.
c. credit to cash in bank for ₱9,450.
d. credit to petty cash fund for ₱9,450.
“There is a time for everything, and a season for every activity under the heavens;” (Ecclesiastes 3:1)
- END –

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1. Bank overdrafts that cannot be offset should be

4. Cash in foreign currency is valued at

6. Noise Co. had the following balances on December 31, 20x1:

Cash in checking account ₱35,000

Cash on hand ₱ 400,000

Bank Accounts Disbursement date Receipt date

Which of the following checks might indicate kiting?

July. 1, 20x1 Established ₱30,000 petty cash fund.

Coins and currencies 2,550

The entry to replenish the fund on December 31, 20x1 includes a

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