382834899 Cash Quiz doc PDF

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CASH AND CASH EQUIVALENTS – Quiz Material Cash or Cash on Hand and In Banks on the balance sheet may include the following items: (1) Currency or cash items on hand (2) Deposits in foreign countries which are subject to foreign exchange restrictions (3) Short-term placements of excess cash which can...

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CASH AND CASH EQUIVALENTS – Quiz Material

1. Cash or Cash on Hand and In Banks on the balance sheet may include the following items: (1) Currency or cash items on hand (2) Deposits in foreign countries which are subject to foreign exchange restrictions (3) Short-term placements of excess cash which can be preterminated (4) Postdated checks (5) Cash set aside for the acquisition or construction of noncurrent assets (a) 1, 2 and 3 only (c) 1 and 3 only (b) 2, 3 and 5 only (d) not given C 2. Balances representing cash, accounts receivable, and payable denominated in other than the local currency should be translated for consolidation at the: (a) historical rate (c) forward rate (b) spot rate (d) current rate D 3. The cash balance reported in the balance sheet normally will not include: (a) small amounts of cash (petty cash) kept on hand in the office. (b) checks received from customers and deposited in the bank. (c) money orders. (d) temporary investments due in one year.

D

4. Which of the following is not considered cash for financial reporting purposes? (a) petty cash funds and change funds (c) coin, currency and available funds (b) money order and certified checks (d) postdated checks and IOUs D 5. Which of the following items in a cash drawer at November 30 is not cash? (a) money orders (c) a customer check dated December 1 (b) coins and currency (d) a customer check dated November 28

C

6. If a financial institution has cash funds in a company, which is in bankruptcy, and the amount recoverable is estimated to be lower than the face amount, cash should be: (a) eliminated from the balance sheet. (b) written down to its discounted or present value. (c) written down to estimated realizable value. (d) stated at face amount. C 7. If the deposit is legally restricted as to withdrawal, the compensating balance related to a long-term long is shown as: (a) cash (c) long-term investment (b) other asset (d) current liability C 8. Each of the following measures strengthens internal control over cash receipts except: (a) the use of a voucher system. (b) preparation of a daily listing of all checks received through the mail. (c) the deposit of cash receipts intact in the bank on a daily basis. (d) the use of cash registers. A 9. 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

B

10. The following statements relate to the petty cash fund. Which statement is true? (a) The amount of coins and currency in the petty cash fund is the same before the fund is reimbursed as it is afterwards. (b) Entries to record the replenishment of the imprest petty cash fund result in debit to various expense accounts and a credit to the petty cash funds. (c) At any time, the sum of the cash in the petty cash fund and the total petty cash vouchers should equal the amount for which the imprest petty cash fund was established. (d) Under the imprest petty cash system, it is not necessary to adjust unreplenished petty cash expenses at end of the year. C 11. Expenses paid out of the petty cash is recorded under two systems of accounting for petty cash: Imprest system Fluctuating system (a) (b) (c) (d)

When When When When

paid replenished paid replenished

When When When When

paid paid replenished replenished

B

12. In reimbursing the petty cash fund, which of the following is true? (a) cash is debited. (c) petty cash is credited. (b) petty cash is debited. (d) expense accounts are debited.

D

13. A cash short or over account: (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 to cash.

C

14. Bank reconciliations are needed to: (a) be sure that all cash receipts are being used efficiently. (b) assist in determining if cash projects have been correct. (c) be sure products are not being sold below cost. (d) identify differences between cash balances reported by the company and its bank. D 15. In the process of preparing a bank reconciliation: (a) outstanding checks should be added to the bank balance of cash. (b) outstanding checks should be subtracted from the book balance of cash. (c) all of the reconciling items shown on a bank reconciliation must be entered in the accounting records after the reconciliation is completed. (d) items that appear on the reconciliation as corrections to the book balance of cash should be entered in the accounting records. D 16. The reconciling item in bank reconciliation that will result in an adjusting entry by the depositor is: (a) outstanding checks (c) bank error (b) deposit in transit (d) bank service charges D 17. What is the adjusting entry for a customer NSF check? (a) debit cash and credit accounts receivable (c) debit service charge and credit cash (b) debit accounts receivable and credit cash (d) no adjustment is necessary B 18. An adjustment to a company’s reported cash balance is needed if: (a) its bank has incorrectly recorded a check. (b) a check has been written that has not yet been received by its bank. (c) a notice of a bank service charge is received with its bank statement. (d) There was a deposit in transit at the end of the period.

C

19. On Dream Company’s bank reconciliation at the end of May, the amount of P500 is deducted from the bank statement balance as a step in determining the adjusted cash in bank balance

that should appear on the balance sheet. A possible explanation for this P500 deduction is: (a) a check deposited by Dream has been returned by the bank marked NSF. (b) the bank has collected a note for the account of the company. (c) a deposit in transit in the amount of P500. (d) the bank erroneously credited Great Company’s deposit on Dream Company’s bank statement. D

20. Which of the following statements is false? (a) Deposits in transit will cause the balance shown in the depositor’s cash ledger account to be greater than the balance reported in the bank statement, all other things being equal. (b) Bank service charges not yet entered in the depositor’s accounting records will cause his balance of cash to be higher than that reported by the bank, all other things being equal. (c) Outstanding checks of a depositor will cause the balance of the cash account in his books to be lower than the balance reported by the bank, all other things being equal. (d) An error made by the bank in crediting an amount to a depositor’s account requires a correcting journal entry in the depositor’s own records. D 21. Blue Company has the following cash balances at December 31, 2002: Undeposited coins and currency P 35,000 Unrestricted demand deposits 1,450,000 Company checks written (and deducted from the demand deposits amount) but not scheduled to be delivered until January 6, 2003 180,000 Time deposits restricted for use (expected use in 2003) 3,000,000 The unrestricted demand deposits included P150,000 compensating balance but not legally restricted as to withdrawal. How much should Blue report as cash in its December 31, 2002 balance sheet? (a) P1,665,000 (b) P1,515,000 (c) P1,520,000 (d) P1,335,000 A 22. The balance sheet of Mall Company as of December 31, 2002 showed the cash amount of P87,300. It was found to include the following items: Postal money orders from customers P2,400 Notes receivable in the possession of a collecting agency 3,200 Receipts for expenses advanced for the account of certain suppliers 1,600 Customer’s postdated checks 1,500 Customer’s checks returned by the bank marked “NSF” 1,800 Currencies and coins on hand 600 Traveler’s check 500 Checks in payment of accounts, still in the safe of the cashier, awaiting instructions for delivery to payees 6,000 Petty cash fund (P160 in currency and P840 in expense receipts) 1,000 The correct cash balance for the balance sheet is: (a) P82,500 (b) P76,500 (c) P81,660 (d) P72,360 D 23. A cash count on the morning of January 2, 2002 showed the following items in the petty cash box of Tray Corporation: Currencies and coins counted P12,560 Envelope containing contributions to employee’s party 90,000 Approved and paid petty cash vouchers 14,500 Employee’s IOUs 180,000 Company check for fund replenishment 92,000 The petty cash fund was established for an amount of P300,000. What is the correct amount of petty cash on the balance sheet as of December 31, 2002? (a) P300,000 (b) P12,560 (c) P104,560 (d) P13,500 C

24. On April 1, 2002, Mighty Company established an imprest petty cash fund for P10,000 by writing a check drawn against its general checking account. On April 30, the fund contained the following: Currency and coins P3,000 Receipts for office supplies 4,000 Receipts for postage (still unused) 2,000 Receipts for transportation 600 On April 25, the company wrote a check to replenish the fund. What is the amount of replenishment under the imprest fund system? (a) P7,000 (b) P6,600 (c) P10,000 (d) P3,000 A 25. If a petty cash fund is established in the amount of P250, and contains P150 in cash and P95

in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credit(s) to the following account(s): (a) petty cash, P75 (c) cash, P95; cash short and over, P5 (b) petty cash, P100 (d) cash, P100 D 26. Bugoy’s checkbook balance at December 31, 2002 was P50,000. In addition, Bugoy had the following items in its safe on that date:...