New Era University

College of Business and Administration

Accounting 2
A.Y. 2014-2015
QUIZ 2
CASH, BANK RECONCILIATION AND ACCOUNTS RECEIVABLE
Name: __________________________________
Year and Section: ______________________
I.

Date:_________________

THEORIES. Box the letter of your choice on the multiple choice part. On
the identification/ enumeration part, write your answer on the space
before the number.
1. To be reported as cash and cash equivalent, the cash and cash
equivalent must be
a. Unrestricted in use for current operations
b. Available for the purchase of property, plant and equipment
c. Set aside for the liquidation of long-term debt
d. Deposited in bank
2. Cash equivalents are
a. Short-term and highly liquid investments that are readily
convertible into cash
b. Short-term and highly liquid investments that are readily
convertible into cash with remaining maturity of three months
c. Short-term and highly liquid investments that are readily
convertible into cash and acquired three months before maturity
d. Short-term and highly liquid marketable equity securities
3. All of the following can be classified as cash and cash equivalents,
except?
a. Redeemable preference shares acquired and due in 60 days
b. Commercial papers held and due for repayment in 90 days
c. Equity investments
d. A bank overdraft
4. Which is false concerning measurement of cash and cash equivalents?
a. Cash is measured at face value
b. Cash in foreign currency is measured at the current exchange rate.
c. If a bank or financial institution holding the funds of the company
is in bankruptcy or financial difficulty, cash should be written
down to estimated realizable value.
d. Cash equivalents should be measured at maturity value, meaning face
value plus interest.
5. Petty cash fund is
a. Separately classified as current asset
b. Money kept on hand for making minor disbursements of coin and
currency rather than by writing checks
c. Set aside for the payment of payroll
d. Restricted cash
6. The petty cash fund account under the imprest fund system is debited
a. Only when the fund is created.
b. When the fund is created and everytime it is replenished.
c. When the fund is created and when the size of the fund is increased.
d. When the fund is created and when the fund is decreased.
7. A Cash Over and Short 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.
8. A bank reconciliation is
a. A formal financial statement that lists all of the bank account
balances of an enterprise.
b. A merger of two banks that previously were competitors.
c. A statement sent by the bank to depositor on a monthly basis.
d. A schedule that accounts for the differences between an entitys
cash balance as shown on its bank statement and the cash balance
shown in its general ledger.
9. In preparing a monthly bank reconciliation, which of the following
items would be added to the balance per bank statement to arrive at
the correct cash balance?

a.
b.
c.
d.
10.
a.

Outstanding checks
Bank service charge
Deposits in transit
A customers note collected by the bank on behalf of the depositor
A proof of cash
Is a physical count of currencies on hand at the end of reporting
period.
b. Is a formal statement showing the total cash receipts during the
year.
c. Is a four-column bank reconciliation showing reconciliation of cash
balances per book and per bank at the beginning and end of the
current month and reconciliation of cash receipts and cash
disbursements of the bank and the depositor during the current
month.
d. Is a summary of cash receipts and cash payments.
11.
It is a credit balance in the cash in bank account that results
from the issuance of checks in excess of the deposits. It is
considered as a current liability.
12.
It is a practice of opening the books of accounts beyond the
close of the accounting period for the purpose of showing a better
financial position and performance by overstating the assets and
income and understating liabilities and expenses.
13.
It is an internal control device for cash which requires that all
cash receipts should be deposited intact and all cash payments should
be made by means of check. Small disbursements are paid out of the
petty cash fund.
14.
This refers to items not representing deposits credited by the
bank to the account of the depositor but not yet recorded by the
depositor as cash receipts. They have the effect of increasing the
bank balance but not reflected on the books.
15.
These are collections already recorded by the depositor as cash
receipts but not yet reflected on the bank statement.
16.
These are checks already recorded by the depositor as cash
disbursements but not yet reflected on the bank statement.
17.
It is an expanded reconciliation in that it includes proof of
receipts and disbursements.
18.
It simply means money.
19.
It is the minimum checking or demand deposit account balance that
must be maintained in connection with a borrowing arrangement with a
bank.
20.
These are bills issued by the government which are also
considered as cash equivalent because of their high liquidity.

II.

PROBLEMS. Encircle the answer of your choice. The solutions must be

completely shown on your worksheets, answers double ruled and the letter
shown beside the answer.
21.
In connection with your audit of Calocohan Corporatiion for the
year ended Deceber 31,2015, you gathered the following:
Current account at Metrobank
P2,000,000
Current account at BPI
(100,000)
Payroll account
500,000
Foreign bank account-restricted(in
1,000,000
equivalent pesos)
Postage stamps
1,000
Employees postdated check
4,000
IOU from controllers sister
10,000
Credit memo from a vendor for a purchase
20,000
return
Travelers check
50,000
NSF Check
15,000
Money order
30,000
Petty cash fund (P4,000 in currency and
10,000
expense receipts for P6,000)
Treasury bills, due 3/30/16(purchased
200,000
12/29/15)
Treasury bills, due 1/31/16(purchased
300,000
2/1/15)

Compute for the cash and cash equivalents that will be reported on the
December 31,2015 statement of financial position.
a. P2,784,000
c. P2,790,000
b. P3,084,000
d. P2,704,000

22.

QC Corporation provided you with the following information:

Commercial savings account of P1,200,000 and a commercial
checking account balance of P1,800,000 are held at PS Bank.
ii.
Travel Advances of P360,000 for executive travel for the first
quarter of the next year (employee to reimburse through salary
deduction)
iii.
A separate cash fund in the amount of P3,000,000 is restricted
for the retirement of a long term debt.
iv.
Petty cash fund of P10,000.
v.
An IOU from a company officer in the amount of P40,000.
vi.
A bank overdraft of P250,000 has occurred at one of the banks the
company uses to deposit its cash receipts. At the present time,
the company has no deposits at this bank.
vii.
The company has two certificates of deposit, each totaling
P1,000,000. These certificates of deposit have maturity of 120
days.
viii.
QC has received a check dated January 2, 2016 in the amount of
P150,000.
ix.
QC has agreed to maintain a cash balance of P200,000 at all times
at PS Bank to ensure future credit availability.
x.
Currency and coin on hand amounted to P15,000.
How much will be reported as cash and cash equivalent at December
31, 2015.
a. P3,025,000
c. P2,575,000
b. P2,825,000
d. P5,025,000
i.

23.
On January 1, 2015, Azkals Company established a petty cash fund
of P10,000. On December 31, 2015 the petty cash fund was examined and
found to have receipts and documents for miscellaneous general
expenses amounting to P8,120. In addition, there was cash amounting to
P1,500.
What is the amount of petty cash shortage or overage?
a. P380 Overage
c. P1,880 shortage
b. P380 Shortage
d. P1,880 overage

24.
On January 1, Tanyag ACo. establishes a petty cash account and
designates Kat Akosi as petty cash custodian. The original amount
included in the petty cash fund is P5,000. The following disbursements
are made from the fund:
Office supplies
P1,730
Postage
1,120
Entertainment
420
The balance in the petty cash box is P1,630.
The person responsible, at all times, for the amount of the petty cash
fund is the
a. Chairman of the Board of Directors
b. President of the company
c. Petty cash custodian
d. General cashier

25.
The following data were taken from Christian Greys check
register for the month of April. Greys bank reconciliation for March
showed one outstanding check, check no. 178 for P2,150 (written on
March 20), and one deposit in transit for P4,350 (made on March 31).
DATE
ITEM
CHECKS
DEPOSITS
BALANCE
2012 April

1
1
1
4
27
29

Beginning
balance
Deposit
Check no. 179
Check no. 180
Deposit
Check no. 181

6,150
250
10,673

26,167
11,774

13,217

32,317
32,567
21,898
33,672
20,490

The following is from Greys bank statement for April:

DATE
2012 April
1

ITEM

CHECKS

DEPOSITS

BALANCE

Beginning
3,950
balance
3
Check no. 179
250
3,700
3
Deposit
4,350
8,050
5
Check no. 180
10,673
(2,623)
5
Automatic Loan
8,150
5,527
5
Deposit
26,417
31,944
20
NSF Check
1,000
30,944
20
Service charge
600
30,344
30
Interest
82
30,426
Assume that any errors or discrepancies you find are Greys, not the banks.
What is the adjusted cash balance as of April 30?
a. P26,833
c. P30,426
b. P26,838
d. P26,872

26.
The following data relate to accounts receivable of Gay company
for 2015:
Accounts receivable, January 1
650,000
Credits sales
2,700,000
Sales returns
75,000
Accounts written off
40.000
Collection from customers
2,150,000
Estimated future sales returns at December 31
50,000
Estimated uncollectable accounts at 12/31 per aging
110,000
What amount should jay report as net realizable value of accounts receivable of
December 31, 2015?
a. 1,200,000
c. 1,085,000
b. 1,125,000
d. 925,000
27. The following information is available for Puso company relating to 2015
operation:
Accounts receivable. January 1
4,000,000
Accounts receivable collected
8,400,000
Cash sales
2,000,000
Inventory, January 1
4,800,000
Inventory, December 31
4,400,000
Purchases
8,000,000
Gross margin for sales
4,200,000
What is the balance of accounts receivable on December 31, 2015?
a. 8,200,000
c. 2,000,000
b. 6,200,000
d. 4,200,000