Intermediate Accounting Sample Problems 3 PDF

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Warning: TT: more functions defined than expected Institute of Accounts. Business and Finance Department of Accountancy and Internal AuditingINTERMEDIATE ACCOUNTING 1DO-IT-YOURSELF MULTIPLE CHOICE QUESTIONSName Date (Family Name) (First Name) (Middle Name) Day/Time Professo r Score Section Rating St...

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Far Eastern University Institute of Accounts. Business and Finance Department of Accountancy and Internal Auditing

INTERMEDIATE ACCOUNTING 1 DO-IT-YOURSELF MULTIPLE CHOICE QUESTIONS Name (Family Name)

(First Name)

(Middle Name)

Professo r

Date Day/Time Score

Section

Rating

Stud. No.

Remarks

MCQ 2.1-1 THEORY (15 Points) Instructions: Select the best answer among the given choices. Write your answer on the space provided before each number. Use only CAPITAL LETTERS. D

1.

Which of the following is not considered cash for financial reporting purposes? A. Petty cash funds and change funds B. Money orders, certified checks, and personal checks C. Coin, currency, and available funds D. Postdated checks and I.O.U.'s

B

2.

Which of the following is considered cash? A. Certificates of deposit (CDs) B. Money orders C. Money market savings certificates D. Postdated checks

D

3.

Which of the following items should not be included in the Cash caption on the statement of financial position? A. Coins and currency in the cash register B. Checks from other parties presently in the cash register C. Amounts on deposit in checking account at the bank D. Postage stamps on hand

B

4.

All of the following may be included under the heading of "cash" except A. currency. B. money market funds. C. checking account balance. D. savings account balance.

D

5.

What is a compensating balance? A. Savings account balances. B. Margin accounts held with brokers. C. Temporary investments serving as collateral for outstanding loans. D. Minimum deposits required to be maintained in connection with a borrowing arrangement.

B

6.

Under which section of the statement of financial position is "cash restricted for plant expansion" reported? A. Current assets. B. Non-current assets. C. Current liabilities. D. Equity.

D

7.

Bank overdrafts generally 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.

B

8.

Which of the following is an appropriate reconciling item to the balance per bank in a bank reconciliation? A. Bank service charge. B. Deposit in transit. C. Bank interest. D. Chargeback for NSF check.

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Far Eastern University Institute of Accounts. Business and Finance Department of Accountancy and Internal Auditing

C

9.

Which of the following is not true? A. The imprest petty cash system in effect adheres to the rule of disbursement by check. B. Entries are made to the Petty Cash account only to increase or decrease the size of the fund or to adjust the balance if not replenished at year-end. C. The Petty Cash account is debited when the fund is replenished. D. All of these are not true.

B

10.

The journal entries for a bank reconciliation A. are taken from the "balance per bank" section only. B. may include a debit to Office Expense for bank service charges. C. may include a credit to Accounts Receivable for an NSF check. D. may include a debit to Accounts Payable for an NSF check.

C

11.

When preparing a bank reconciliation, bank credits are A. added to the bank statement balance. B. deducted from the bank statement balance. C. added to the balance per books. D. deducted from the balance per books.

A

12.

Highly liquid investments that are readily convertible into cash can be shown as cash equivalents if the investments have a maturity of 90 days or less A. From the date of investments are acquired. B. From the end of the reporting period. C. From the date of issue of financial statements. D. From the date the investments are acquired or from the end of the reporting period.

D

13.

In reimbursing the imprest petty cash fund, which of the following statements is tru? A. Cash is debited B. Petty cash is debited C. Petty cash is credited D. Expense accounts are debited

C

14.

Which does not require an adjusting entry on the depositor’s books? A. Collection from customer deposited in the amount of P 100,000 but recorded by the depositor as P 10,000. B. Check in payment of accounts payable amounting to P 50,000 is recorded by the depositor at P 5,000. C. Deposit of another company s credited to the account of our enterprise D. None of the above

A

15.

Which method of bank reconciliation is preferable? A. Adjusted balance method B. Book to bank method C. Bank to book method D. All of the above

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Far Eastern University Institute of Accounts. Business and Finance Department of Accountancy and Internal Auditing

MCQ 2.1-2 PROBLEMS (20 Points) Instructions: Select the best answer among the given choices. Write your answer on the space provided before each number. Use only CAPITAL LETTERS. B

1.

Consider the following: Cash in Bank – checking account of P13,500, Cash on hand of P 500, Postdated checks received totaling P 3,500, and Certificates of deposit totaling P 124,000. How much should be reported as cash in the statement of financial position? A. P 13,500. B. P 14,000. C. P 17,500. D. P 131,500. SOLUTION: Cash in bank – checking account Cash on hand Post-dated checks received Certificates of Deposit Cash in the Statement of Financial Position

B

2.

3.

4.

5.

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Noncurrent asset Current liability Letter B

200,000 3,000 55,000 258,000

Qualified as Cash Equivalents Accounts receivable Letter C

If a petty cash fund is established in the amount of P 2,500, and contains P 1,500 in cash and P 950 in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits to the following accounts A. Petty Cash, P 750. B. Petty Cash, P 1,000. C. Cash, P 950; Cash Over and Short, P 50. D. Cash, P 1,000. SOLUTION: Expenses Cash Over and Short (P 2,500 – P 1,500 – P 950) Cash in Bank

B

10,000 10,000

Casper Company has the following items at year-end: Cash in bank, P 200,000; Petty cash fund, P 3,000; Commercial paper with maturity of 2 months, P 55,000; Postdated checks, P 14,000. Casper should report cash and cash equivalents of A. P 200,000. B. P 203,000. C. P 258,000. D. P 272,000 SOLUTION: Cash in bank Petty Cash Fund Commercial paper with maturity of 2 months Post-dated checks (assumed of customers) Total cash and cash equivalents

D

This is Accounts Receivable This is Temporary Investment Letter B

Hendrix Company has cash in bank of P10,000, restricted cash in a separate account of P 3,000, and a bank overdraft in an account at another bank of P1,000. Hendrix should report cash of A. P 9,000. B. P 10,000. C. P 12,000. D. P 13,000 SOLUTION: Cain in bank Restricted cash in a separate account Bank overdraft Cash to be reported

C

13,500 500 14,000

950 50 1,000

If the month-end bank statement shows a balance of P 36,000, outstanding checks are P 12,000, a deposit of P 4,000 was in transit at month end, and a check for P 500 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is A. P 27,500. B. P 28,500. C. P 20,500....