Professional Documents
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THEORY OF ACCOUNTS
myadong,
cpa;
lacordova,
cpa
1. One of the following is least likely classified as cash for financial reporting purposes.
a. Bank drafts and money orders
b. Stale checks issued to creditors
c. Postdated checks from customers
d. Undelivered checks to trade suppliers
2. Under PAS 7, cash equivalents are short-term and highly liquid investments that are
a. classified as available-for sale securities
b. Readily convertible into cash and acquired one year before maturity
c. Readily convertible into cash and acquired six months before maturity
d. Readily convertible into cash and acquired three months before maturity
3. Balance sheet date is December 31, 2008. Which of the following is not a cash equivalent?
a. 12-month BSP treasury note due February 15, 2009 (date of purchase: November 31, 2008)
b. 6-month BSP treasury note due January 15, 2009 (date of purchase: October 1, 2008)
c. 3-month BSP treasury bill due March 15, 2009 ( date of purchase: December 15, 2008)
d. 1-month money market placement
4. Cash deposited in a bank experiencing financial difficulty is written down to
a. Present value
c. Estimated realizable value
b. Maturity value
d. Value in use
5. Cash denominated in foreign currency shall be translated to Philippine peso using
a. Closing rate
c. Historical rate
b. Average rate
d. Passing rate
6. Significant deposits in a foreign bank subject to foreign exchange restriction should be classified
a. as cash and cash equivalents with appropriate disclosure
b. as non-trade receivables with appropriate disclosure
c. as held-to-maturity securities with appropriate disclosure
d. as part of non-current assets with appropriate disclosure
7. A material credit balance in the cash in bank account (BANK OVERDRAFT)
a. Is treated as an error
b. Is treated as a current liability
c. Is netted against cash and net cash amount is reported
d. May be offset against a demand deposit account maintained in another bank
8. Checks drawn before the balance sheet date but held later delivery ( UNDELIVERED CHECKS)
a. Should be treated as trade receivable
b. Should be regarded as cash equivalents
c. Should be restored back to cash balance
d. Should be treated as outstanding checks for bank reconciliation purposes
9. Deposits held as compensating balances
a. Usually do not earn interest
b. If legally restricted and held against short-term credit may be included as cash
c. If legally restricted and held against long-term credit may be included among current assets
d. If unrestricted as to withdrawal may be included as cash
10. The payment of accounts payable made after the close of the accounting period are recorded as if it were made at the
end of the current period.
THEORY OF ACCOUNTS
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a. Window dressing
b. Lapping
c. Kiting
d. Fishing
11. All of the following are necessary components of internal control over cash, except:
a. Daily deposit of all receipts in the companys bank account
b. Bank reconciliation
c. Petty cash system
d. Cash reserve
12. Which of the following is an incorrect application of the Imprest system of cash control?
a. Cash receipt must be deposited on a regular basis
b. Cash disbursements must be made in the form of checks, regardless of the amount
c. Material cash disbursements must be made in the form of checks
d. Insignificant cash disbursements must be made out of the petty cash fund.
13. Petty cash fund is
a. Restricted cash
b. Set aside for the payment of payroll
c. Separately classified as current asset
d. Money kept on hand for making minor disbursements of coins and currency
14. What is the major purpose of an Imprest petty cash fund?
a. To ease the payment of cash to vendors
b. To effectively control cash disbursements
c. To effectively plan cash inflows and outflows
d. to determine the honesty of the petty cashier
15. Under the Imprest fund system, the petty cash fund account is debited
a. Only when the fund is created
b. When the fund is created and every time it is replenished
c. When the fund is created and when the size of the fund is increased
d. When the fund is abolished and when the size of fund is decreased
PETTY CASH ACCOUNTING
For purposes of replenishing the petty cash fund, assume the following amounts;
Petty cash fund: P10,000 (representing the size of the fund)
Petty cash vouchers: P5,000 (representing various minor expenses for the period)\
CASE
Coins and Currencies Amount of Replenishment
Petty Cash Replenishment Journal
Check
entry
1
Expenses
5,000
P5,000
P5,000
Cash in Bank
5,000
2
P4,000
17.)
18.)
19.)
20.)
P7,000
21.)
22.)
23.)
24.)
25. The entry to replenish the petty cash fund of P1,000 of various minor expenditures would include a :
a. Debit to cash
c. debit to petty cash fund
b. credit to cash
d, credit to petty cash fund
26. IOUs found in the petty cash drawer at the time of replenishment should be reported as part of
a. Cash and cash equivalents
c. Trading securities
b. Receivables
d. Prepare the petty cash voucher
27. An employee asks for an authorized reimbursement of transportation charges out of the Imprest petty cash fund. To
document this transaction, the petty cashier should
THEORY OF ACCOUNTS
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c. credit cash
d. Prepare the petty cash voucher
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