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1 CASH & CASH

ACREV 421 – Financial Accounting & Reporting


EQUIVALENTS
toa/bamc
1. Which of the following is not a basic characteristic of a system of cash control?
A. Combined responsibility for handling and recording cash
B. Daily deposit of all cash received
C. Internal audits at irregular intervals
D. Use of voucher system
2. Deposits held as compensating balances
A. If legally restricted and held against long-term credit may be included among current assets
B. If legally restricted and held against short term credit may be included as cash
C. If legally restricted and held against a short term credit should not be included in the cash balance but is reported among current
assets.
D. Usually do not earn interest
3. Which of the following is not true?
A. Adjustments of the petty cash account is made at the end of the period to avoid understatement of expenses and overstatement of
cash.
B. Entries are made to the petty cash account to increase or decrease the size of the fund or to adjust the balance if not replenished at
year end
C. The imprest petty cash system in effect adheres to the rule of disbursements by check
D. The petty cash account is debited when the fund is replenished.
4. A proof of cash is
A. A proof of a company’s liquid position
B. A proof of the existence of a cash deposit in a bank
C. A reconciliation of the cash receipts and payments during the current period, together with the beginning and ending balance of cash
D. A reconciliation of the cash receipts and payments during the previous period, together with the beginning and ending balances of cash
5. Seldom does the balance of cash in bank account in the depositor’s books agree with the balance appearing in the bank statement at a
particular date because of
A. A tax avoidance
B. Bank secrecy requirements
C. Negligence of the bookkeeper
D. Time-lapse differences
6. A cash short or over account is
A. A contra-asset to cash
B. Debited when the petty cash fund proves to be over
C. Debited when the petty cash fund proves to be short
D. Not generally accepted
7. On October 31, 2022, Alpha had a cash at three different banks. One account balance is segregated solely for a November 15, 2022
payment into a bond sinking fund. A second account, used for branch operations, is overdrawn. The third account, used for regular
corporate operations, has a positive balance. How should these accounts be reported in Alpha’s October 31, 2022 statement of financial
position?
A. The segregated account should be reported as a non-current asset, the regular account should be reported as a current asset, and the
overdraft should be reported as a current liability.
B. The segregated account should be reported as a non-current asset, and the regular account should be reported as a current asset, net
of the overdraft.
C. The segregated and regular accounts should be reported as current assets, and the overdraft should be reported as a current liability.
D. The segregated and regular accounts should be reported as current assets, net of the overdraft.
8. Travel advances should be reported as
A. Cash
B. Investments
C. Prepayments
D. Supplies
9. A good internal control system provides procedures for
A. Allowing one person to receive cash and to record cash receipts
B. Delaying the deposit of cash collections because no one knows for sure the account to be credited
C. Making payments from the day’s collections
D. Preparing regular bank reconciliation
10. Which of the following is not an aid to the effective control of cash disbursements?
A. Requiring all checks to be pre-numbered consecutively
B. Requiring all checks to be signed by one person and countersigned by another
C. Requiring approved supporting documents for each check issued
D. Requiring disbursements to be done in cash from daily receipts prior to making bank deposits to minimize cash.
11. In a bank reconciliation that attempts to reconcile the bank balance to the correct cash balance, the following items would affect
reconciliation in what way?(Deposits in transit and Outstanding checks)
A. Added and added
2 CASH & CASH
ACREV 421 – Financial Accounting & Reporting
EQUIVALENTS
toa/bamc
B. Added and deducted
C. Deducted and added
D. Deducted and deducted
12. Cash and cash equivalents on the statement of financial position exclude
A. Cash reserved for acquisition of property, plant and equipment items
B. Checks drawn before the reporting date but held for later delivery to creditors
C. Unrestricted 30-day time deposits
D. Euro deposited in foreign currency depository account
13. Bank statements provide information about all of the following, except
A. Bank charges for the period
B. Checks cleared during the period
C. Errors made by the company
D. No sufficient fund checks
14. Beta placed a ₱3 million in the money market for 60 days subject to pretermination. The ₱3 million may be
A. Considered as part of its trading securities with the appropriate disclosure in the notes to the financial statements.
B. Included as part of the cash and cash equivalents with the appropriate disclosure in the notes to the financial statements
C. Recorded as part of its trading securities without need of any disclosure
D. Treated as short-term receivable with the appropriate disclosure in the notes to financial statements
15. Which of the following would not be classified as cash?
A. Cashier’s check
B. No sufficient fund check
C. Personal check
D. Traveler’s check
16. The journal entries for a bank reconciliation
A. Are taken from the balance per bank section only
B. May include a credit to accounts receivable for an NSF check
C. May include a debit to accounts payable for an NSF check
D. May include a debit to office expense for bank service charges
17. As of December 31, 2022, Charlie had various checks and papers in its safe. Which item should not be included in its cash account on its
statement of financial position?
A. A past-due promissory note in favor of Charlie as its president
B. Charlie’s December 31, 2022, ₱100,000 check payable to Echo, a Charlie’s supplier
C. Delta’s December 31, 2022, ₱30,000 check payable to Charlie
D. ₱80,000 cash
18. The amount reported as cash on a company’s statement of financial position normally should exclude
A. Petty cash fund
B. Post-dated checks issued by the company
C. Post-dated checks payable to the company
D. Undelivered checks to the payee written and signed by the company
19. If the cash balance shown in the company’s cash records is more than the correct cash balance and neither the company for the bank had
made any errors, there must be
A. Bank charges not yet recorded by the depositor
B. Deposit in transit
C. Note collected by the bank not yet recorded by the depositor
D. Outstanding checks
20. Below are reconciling items in an enterprise’s bank reconciliation statement
I. Deposits in transit
II. Company check for ₱32,500 recorded in the books for ₱23,500
III. Check of another company erroneously charged by bank in the company’s account
IV. Deposit of another company erroneously credited by bank to the company’s account
V. Bank service charges
VI. No sufficient fund charged back by the bank
VII. Company deposit for ₱41,000 recorded in the books for ₱14,000
Which of the following items would be shown as deductions from the cash balance per books in order to arrive at the correct cash
balance?
A. II, IV, V, VI, and VII
B. II, V, VI and VII
C. II, V and VI
D. V,VI and VII
3 CASH & CASH
ACREV 421 – Financial Accounting & Reporting
EQUIVALENTS
toa/bamc
- The best way to predict your future is to create it. -
Abraham Lincoln

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