QUIZ #1 – INTACC

Theories:
Which of the following is not a debit memo?

Bank service charges

No sufficient funds checks (NSF)
Automatic debits representing payments of bills by the bank on
behalf of the depositor
Direct deposits of customers to the depositor’s account

Which of the following is not a basic characteristic of a

system of cash control?

Use of a voucher system

Combined responsibility for handling and recording cash
Daily deposit of all cash received
Internal audits at irregular intervals

The principal purpose of a voucher system is to provide

assurance that

all cash receipts are deposited intact in the bank.

all cash disbursements are approved before a check is issued.
all cash receipts are recorded in the accounting records.
all purchase invoices are supported by debit memoranda.

All of the following can be classified as cash and cash

equivalents, except

A bank overdraft
 Redeemable preference shares acquired and due in 60 days
Commercial papers held and due for repayment in 90 days
Equity investments

Which of the following is added to the cash balance per

bank statement when preparing a bank reconciliation
statement?

Credit memo
Debit memo
Outstanding check
Deposit in transit

The amount reported as "Cash" on a company's statement

of financial position normally should exclude

postdated checks that are payable to the company.

cash in a payroll account.
undelivered checks written and signed by the company.
petty cash.

As an internal control, bank reconciliation statements are

usually prepared

on a daily basis.
on a monthly basis.
annually every year-end.
whenever the accountant feels like it.

These are deductions made by the bank to the depositor’s

bank account but not yet recorded by the depositor.
 Credit memos (CM)
Debit memos (DM)
Outstanding checks (OC)
Deposits in transit (DIT)

It is a report that is prepared for the purpose of bringing

the balances of cash per records and per bank statement
into agreement.

Bank statement
Check Disbursement Voucher
Bank reconciliation
Bank deposit slip

Which of the following represents a debit memo?

Collections made by the bank on behalf of the depositor.

Interest income earned by the deposit.
Loan proceeds directly credited or added by the bank to the
depositor’s account.
Interest expense on a loan that is directly deducted from the
depositor’s account.

Deposits in foreign bank which are subject to foreign

exchange restriction should be classified

Separately as current asset with appropriate disclosure

Separately as noncurrent asset with appropriate disclosure
As part of cash and cash equivalents
Be written off as loss
Which of the following statements are characteristics of
an effective control of cash disbursements?

Statement 1: Requiring all checks to be pre-numbered

consecutively.

Statement 2: Requiring all checks to be signed by one person and

countersigned by another.

Statement 3: Requiring approved supporting documents for each

check issued.

Statement 4: Requiring disbursements to be done in cash from

daily receipts prior to making bank deposits to minimize handling
of cash.

1, 2, and 3
1, 3, and 4
1 and 2
2, 3, and 4

These are additions made by the bank to the depositor’s

bank account but not yet recorded by the depositor.

Credit memos (CM)

Debit memos (DM)
Outstanding checks (OC)
Deposits in transit (DIT)

These are deposits made but not yet credited by the bank
to the depositor’s bank account.

Credit memos (CM)

 Debit memos (DM)
Outstanding checks (OC)
Deposits in transit (DIT)

Which is not considered as a cash equivalent?

A three-year treasury note maturing on May 30 of the current

year purchased by the entity on April 15 of the current year.
A three-year treasury note maturing on May 30 of the current
year purchased by the entity on January 15 of the current year.
A 90-day T-bill.
A 60-day money market placement.

In reconciling the cash balance with the book balance,

which of the following would not cause the bank balance
shown in the bank statement to be lower than the
unadjusted book balance?

Interest credit to the account of the bank.

Deposit in transit.
Cash on hand
NSF checks from customer returned by the bank

Which of the following is added to the cash balance per

books when preparing a bank reconciliation statement?

Credit memo
Debit memo
Outstanding check
Deposit in transit
These are checks drawn and released to payees but are
not yet encashed with the bank.

Credit memos (CM)

Debit memos (DM)
Outstanding checks (OC)
Deposits in transit (DIT)

A cash short or over account is

A contra account to cash

Not legally restricted
Debited when petty cash fund proved out short
Debited when the petty cash fund proves out over

Which of the following would not be classified as cash?

Personal checks
Travelers' checks
Cashiers' checks
Postdated checks

Problems:
1.The following information was included in the bank
reconciliation of Huawei, Inc. Assume all other reconciling items
are listed below:

Checks and charges recorded by bank in May

Including a May service charge of
P500 85,000
Service charge made by bank in April and recorded in the books
in May 2,000
Total credits to cash in all journals during
May 90,000
Customer’s NSF check returned as a bank charge in May (no entry
made
In the
books)
10,000
Customer’s NSF check returned in April and redeposited in May
(no entry made in
The books in either April or
May) 5,000
Outstanding checks at April
30 40,0
00

How much were the total outstanding checks at May 31? 53,500

2. On December 31, 2023, Manning Company had the following

cash balances:

Cash in bank 3,000,000

Petty cash fund (15,000 in petty cash vouchers) 50,000
Certificate of deposit – 120 days due on
January 15, 2024 1,000,000
Savings deposit 500,000
Bond sinking fund 2,000,000
Money market placements 1,000,000

Cash in bank includes P500,000 of compensating balance against

a long-term borrowing
arrangement on December 31, 2023. The compensating balance
is legally restricted as to
withdrawal by Manning. The bond sinking fund is for bonds
maturing on June 30, 2024. A check of P300,000 dated December
31, 2023, in payment of accounts payable was recorded and
mailed on January 2, 2024. In the statement of financial position,
what amount should be reported as “cash and cash equivalents”?
6,335,000

3. The ledger account of Cologne Company showed a ledger

balance of P914,000 on December 31, 2023. The bank statement
as of that date showed a balance of P1,430,000. Upon comparing
the statement with the cash records, the following facts were
determined:

a. There were bank service charges for December of P5,000.

b. A bank memo stated that a customer’s note for P300,000 and
interest of P36,000 had been collected on December 29, and the
bank has made a charge of P5,000 on the collection. No entry had
been made in Cologne’s books when the customer’s note was
sent to the bank for collection.
c. Receipts for December 31 for P620,000 were not deposited
until January 2, 2024.
d. Checks outstanding on December 31 totaled P400,000,
however, 150,000 have been certified.
e. The bank had charged the Cologne’s Company’s account for a
customer’s uncollectible check amounting to P25,000 on
December 29.
f. A customer’s check for P700,000 had been entered as P70,000
in the cash receipts journal by Cologne on December 15.
g. Check no. 777 in the amount of P115,000 had been entered in
the cash book as P151,000, and check no. 799 in the amount of
P90,000 had been entered as P9,000. Both checks had been
issued to pay for purchases of equipment.

What is the amount of cash to be shown in the December 31,

2023, statement of financial position? 1,800,000
4. The petty cash fund of Boston Company on December 31,
2023, is composed of the following:
Coins and currencies
15,000
Petty cash vouchers:
Grab delivery
5,000
Supplies
4,000
Cash advances to employees
3,000
Employee’s check returned by bank marked NSF
6,000
Check drawn by the company payable to the
order of Ms. Pantoja, petty cash custodian,
representing her salary
20,000
A sheet of paper with names of employees
together with contribution for a birthday gift of a
co-employee in the amount of
2,000
Total 55,000

The petty cash ledger account has an imprest balance of P50,000.

What is the correct amount of petty cash on December 31, 2023?
35,000
5. The correct cash and cash equivalents balance on December
31, 2017 is? 198,310

6. The December 31, 2017 trial balance of Agee Company

includes the following accounts:

Petty cash
fund
70,000
Current account –
Metrobank
4,000,000
Current account – BPI
(overdraft)
(250,000)
120-day Money market placement –
RCBC 1,000,000
Time deposit –
PNB
2,000,000

Additional Information:

• The petty cash fund includes unreplenished December 2017

petty cash expense vouchers for P15,000 and an employee check
for P5,000 dated January 31,2018.

• A check for P100,000 was drawn against Metrobank current

account dated and recorded December 27, 2017 but delivered to
payee on January 10, 2018.

• The PNB time deposit is set aside for land acquisition in early
January 10,2018.

What should be reported as cash and cash equivalents on

December 31, 2017? 4,150,000

7. An entity maintains a checking account at the West Bank. The

bank provides a bank statement along with canceled checks on
the last day of each month. The October bank statement included
the following information:

Balance, October 1 3,200,000

Deposits 8,600,000
Checks processed 7,500,000
Service charges 50,000
NSF checks 150,000
Monthly loan payment
deducted directly by bank from
account including P50,000
in interest 500,000

Deposits outstanding totaled P400,000 and all checks written by

the entity were processed by the bank except for those totaling
P500,000. In addition, a check for P200,000 was incorrectly
recorded by the entity as a P300,000 disbursement. The bank
correctly processed the check during October.
What amount should be reported as cash in bank on October 31?
3,500,000

8. Horford Company provided the following information with

respect to its cash and cash equivalents on December 31, 2023.

Checking account at Security bank

(200,000)
Checking account at BPI
2,500,000
Payroll account
600,000
Sales tax account
700,000
Sinking fund cash
3,000,000
Employee post-dated check
300,000
Traveler’s check
150,000
NSF check
90,000
Petty cash fund (Currency and coins, 30,000 and
expense vouchers of 20,000)
50,000
Money order
200,000
T-bills, 90 days due January 20, 2024
1,500,000

What amount would be reported as unrestricted cash and cash

equivalents on the statement of financial position? 5,680,000

9. Tamia Company provided following information on December

31, 2023:

Cash in bank per book

6,720,000
Cash in bank per bank statement
7,500,000
Deposit in transit
1,200,000
Outstanding checks, including certified
check of P200,000
1,500,000
Note collected by bank for Tamia,
including interest of P100,000
1,100,000
Service charge for December 20,000
DAIF checks of customers returned by bank
500,000
Error in recording a check issued. Correct
amount is 100,000 but recorded at 200,000
100,000
Deposit in another bank closed by BSP
1,500,000
Currency and coins on hand
200,000
Petty cash fund 50,000

What is the total “cash” to be reported as current asset on

December 31, 2023? 7,650,000

10. Huawei Company is in the process of preparing the financial

statements for the current year. The following items are being
considered:

· Balances in the entity’s accounts at the First Bank: checking

P5,000,000, savings P500,000
· Undeposited customer checks of P300,000
· Currency and coins on hand of P100,000
· Savings account at the Second Bank with a balance of
P2,000,000. This account is being used to accumulate cash for
future plant expansion.
· P400,000 in a checking account at the Second Bank. The
balance in the account represents a 10% compensating balance
for a P4,000,000 loan with the bank. The entity may not withdraw
the funds until the loan is due in three years.
· Treasury bills: 2-month maturity bills P1,000,000 and 7-
month bills P1,500,000

What amount should Huawei report as cash and cash

equivalents? 6,900,000

11. What is the amount of cash in bank balance of Huawei’s

Company? 361,750

12. Martinson Company’s checkbook balance on December 31,

2023, was P1,500,000. In addition, Martinson held the following
items in its safe on December 31.

(1) A check for P200,000 from Walter Corporation received

December 1, 2023, dated January 5, 2024, which included in the
checkbook balance.

(2) An NSF check from Lindon Company in the amount of

P100,000 that had been deposited at the bank, but was returned
for lack of sufficient funds on December 29. The check was to be
redeposited on January 3, 2024. The original deposit has been
included in the December 31 checkbook balance.
(3) Coin and currency on hand amounted to P350,000.

(4) An unrecorded money order for P700,000.

(5) Company checks that have been written and recorded

amounting to P500,000 which were all dated as of December 31,
2023 were also found in a sealed envelope at the top drawer of
the safe.

What is the correct amount of cash on December 31, 2023?

2,750,000

13. As of June 30, 2020, the bank statement of Huawei Trading

had an ending balance of P373,612. The following date were
assembled in the course of reconciling the bank balance:

· The bank erroneously credited Huawei Trading for P2,150 on

June 19.
· During the month, the bank charged NSF checks amounting
to P2,340 of which P800 had been redeposited on the 24th of
June.
· Collection for June 30 totaling P10,330 was deposited the
following month
· Checks outstanding as of June 30 were P30,205
· Notes collected by the bank for Huawei Trading were P8,150
and the corresponding bank charges were P50.

What is the adjusted bank balance on June 30, 2020? 351,587

14. Huawei Company reported the checkbook balance on

December 31, 2013 at P8,000,000. In addition, the entity held the
following items in the safe on that date:

Check payable to Huawei, dated January 2, 2014 in payment of

sale,
not included in December 31 checkbook
balance 1,000,000
Check payable to Huawei, deposited December 15 and included in
December 31 checkbook balance, but returned by bank on
December 30
stamped “NSF”. The check was redeposited on January 2,2014
and cleared on
January 5,
2014.
3,000,000
Check drawn on Huawei’s account, dated and recorded on
December 31, 2013
but not mailed until January 15,
2014 2,500,000
Coins and currencies on
hand 800,00
0
Three-month money market
instrument 1,500,000

How much should be reported as cash and cash equivalents?

9,800,000