Professional Documents
Culture Documents
Date: ____________________________
Prof: Nathaniel W. Ansay
Part I Theory Multiple Choice: Write the letter of the best answer (USE CAPITAL LETTERS, NO ERASURES).
1. Who is responsible, at all times, for the amount of the petty cash fund?
A. General cashier
B. President of the company
C. Petty cash custodian
D. Chairman of the Board of Directors
2. What is the effect of not replenishing the petty cash fund at year-end and not making the appropriate adjusting entry?
A. A detailed audit is necessary.
B. The petty cash custodian should turn over the petty cash to the general cashier.
C. Cash will be overstated and expenses understated.
D. Expenses will be overstated and cash will be understated.
3. The primary purpose of sending a standard confirmation request to financial institutions with which the client has done
business during the year is to:
A. Detect kiting activities that may otherwise not be discovered.
B. Corroborate information regarding deposit and loan balances.
C. Provide the data necessary to prepare a proof of cash.
D. Request information about contingent liabilities and secured transactions.
4. The auditor should ordinarily mail confirmation requests to all banks with which the client has conducted any business during
the year, regardless of year-end balance, since
A. The confirmation form also seeks information about indebtedness to the bank.
B. This procedure will detect kiting activities which otherwise not be detected.
C. The mailing of confirmation forms to all such banks is required by GAAS.
D. This procedures relieves the auditor of any responsibility with respect to non-detection of forged checks.
5. How will the auditor most likely utilize the bank reconciliation as evidence in the audit of cash?
A. The auditor tests deposits-in-transit and outstanding items to other corroborating evidence.
B. The auditor sends the reconciliation to the bank for independent verification.
C. The auditor performs the reconciliation for the client to record the proper cash balance.
D. The auditor traces the book balance of the reconciliation to the cutoff bank statement.
6. The opinion expressed by the auditor when the auditor concludes that the financial statements are prepared, in all material
respects, in accordance with the applicable financial reporting framework is
A. Qualified opinion
B. Unmodified opinion
C. Undeniable opinion
D. Denial of opinion
7. The adverse opinion report will be issued by the independent auditor when he/she
A. Suspects the client has not followed the identified financial reporting framework.
B. Suspects the clients financial statements are not in conformity with PSAs.
C. Has knowledge that the financial statements are not in conformity with the applicable financial reporting framework.
D. Has knowledge that PSAs were not followed.
8. Both disclaimers and adverse opinions are used
A. When the condition is material and pervasive.
B. Irregardless of the auditors independence.
C. Whether the condition is material or not.
D. Irregardless of clients choice of unacceptable accounting method.
9. Which of the following circumstances would most likely cause the auditor to modify his opinion?
Immaterial Misstatements
Scope Limitation
A.
Yes
No
B.
Yes
Yes
C.
No
No
D.
No
Yes
FEU Cavite
Date: ____________________________
Prof: Nathaniel W. Ansay
10. If the auditor believes that a required material disclosure is omitted from the financial statements, the auditor should decide
between issuing a(n)
A. Qualified opinion or an adverse opinion.
B. Disclaimer of opinion or a qualified opinion.
C. Adverse opinion or a disclaimer opinion.
D. Unmodified opinion or a qualified opinion.
Part II Problems Multiple Choice: Write the letter of the best answer (USE CAPITAL LETTERS, NO ERASURES).
11. The following information has been extracted from the accounting records of the HAZELNUT COMPANY at December
31, 2014:
1. Cash on hand (undeposited sales receipts)
P40,800
2. Certificate of time deposit with maturity of 3 months
1,000,000
3. Customers note receivable
40,000
4. Reconciled balance in AA Bank checking account
(14,000)
5. Reconciled balance in BB Bank checking account
374,000
6. Balance in CC savings account
342,400
7. Customers postdated check
54,000
8. Employee travel advances
64,000
9. Cash in bond sinking fund
48,000
10. Bond sinking fund investments
323,600
11. Postage stamps
17,000
What total amount should Hazelnut Company report as Cash at December 31, 2014?
A. P805,200
C. P743,200
B. P757,200
D. P703,200
12. The controller of the LYRIC CO. is trying to determine the amount of cash and cash equivalents to be reported on its
December 31, 2014, statement of financial position. The following information is provided:
1. Balances in the companys accounts at the Monte Bank:
* Checking account P540,000
* Savings account P884,000
2. Undeposited customer checks of P208,000.
3. Currency and coins on hand of P23,200.
4. Savings account at the Naic Bank with a balance of P350,000. This account is being used to accumulate cash for future
plant expansion (in 2016).
5. P800,000 balance in a checking account at the Naic Bank. In exchange for a line of credit, Lyric Co. has agreed to
maintain a minimum balance of P100,000 in this account.
6. Treasury bills; 30-day maturity bills totaling P600,000, and 180-day bills totaling P800,000.
What total amount of Cash and cash equivalents should be reported in the current asset section of the 2014 statement of
financial position?
A. P3,055,200
C. P2,955,200
B. P2,455,200
D. P2,355,200
13. The controller of the OTO COMPANY is the process of preparing the companys December 31, 2014 financial statements.
He is trying to determine the correct balance of cash and cash equivalents to be reported as a current asset in the statement of
financial position. The following items are being considered:
1.
2.
3.
4.
5.
6.
7.
Savings account of P900,000 and a checking account balance of P1,200,000 are held at Manila Bank.
Money market placement with maturity of 3 months, P7,500,000.
Currency and coins on hand amounted to P11,550.
Travel advances of P270,000 for the first quarter of next year (employee reimbursement will be through salary deduction).
Oto Company has purchased P3,150,000 of commercial paper of Mendez Corp. which is due in 60 days.
A separate cash fund amounting to P2,250,000 is restricted for the retirement of long-term debt.
Petty cash fund of P1,500.
FEU Cavite
Date: ____________________________
Prof: Nathaniel W. Ansay
FEU Cavite
Date: ____________________________
Prof: Nathaniel W. Ansay