UNIVERSITY OF SANTO TOMAS

AMV-COLLEGE OF ACCOUNTANCY
CA5105 – INTERMEDIATE ACCOUNTING I
MOCK TEST ( Part 2 )

1. Balance sheet date is December 31, 2019. Which of the following is not a cash
equivalent?
a. 12-month BSP treasury note due February 15, 2020 (date of purchase:
November 30, 2019)
b. 6-month BSP treasury note due January 15, 2020 (date of purchase: October
1, 2019)
c. 3-month BSP treasury bill due March 15, 2020 (date of purchase: December
31, 2019)
d. 1-month money market placement

2. 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.

3. What happens when a petty cash is in use?

a. Expenses paid with petty cash are recorded when the fund is replenished.
b. Most small amounts are paid from cash receipts before they are deposited.
c. Petty cash is debited when the fund is replenished.
d. Petty cash is credited when the fund is replenished.

4. Bank reconciliation are normally prepared on a monthly basis to identify adjustments

needed in the depositor’s records and to identify bank errors. Adjustments on the part
of the depositor should be recorded for
a. All items except bank errors, outstanding checks and deposits in transit.
b. Bank errors, outstanding checks and deposits in transit.
c. Book errors, bank errors, deposits in transit and outstanding checks.
d. Outstanding checks and deposits in transit.

5. In preparing a bank reconciliation, interest paid by the bank on the depositor’s account
is
a. added to the bank balance.
b. added to the book balance.
c. subtracted from the bank balance.
d. subtracted from the book balance.

6. Which of these items would not accompany a monthly bank statement?

a. Depositor’s checks paid by the bank during the month
b. Copies of outstanding checks at the end of the month
c. Copies of bank debit memos issued during the month
d. Copies of bank credit memos issued during the month

7. Compensating balance
a. If legally restricted is reported as part of the regular cash account
b. If legally restricted is reported as cash held as compensating balance and classified
as current asset if related to a short term loan
c. if legally restricted is reported as cash held as compensating balance and classified as
current asset if related to long-term loan
d. if not legally restricted is reported separately in the current asset section of the
statement of financial position

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8. In petty cash fund replenishment under imprest system
a. Expense accounts are credited
b. Cash in bank is debited
c. Cash in bank is credited
d. No journal entry

9. Which of the following is false when the petty cash fund proves out short?
a. Cash short and over account is debited
b. Cash short and over account is credited
c. Miscellaneous Expense may be debited to close cash short/over account
d. Receivable from custodian may be debited to close cash/over account

10. At year end, petty cash fund is adjusted for any unreplenished petty cash
a. In order to avoid understatement of cash and overstatement of expenses
b. In order to avoid overstatement of cash and understatement of expenses
c. In order to determine whether cash shortage or overage exists
d. In order to make the petty cash custodian liable for the shortage

11. Bank statement may provide information about all of the following except
a. Total checks paid by the bank
b. Total deposits acknowledged by the bank
c. Deposit in transit
d. Bank service charge

12. In preparing monthly bank reconciliation, which of the following items would be
deducted from the bank balance in order to arrive at the correct cash balance for
balance sheet purposes?
a. Bank service charge
b. Deposit in transit
c. Erroneous bank charge
d. Erroneous bank credit

13. If the cash balance shown in the company’s accounting records is more than the correct
cash balance and neither the bank nor the depositor has made any errors, there must
be
a. Bank credit memo not yet recorded by the depositor
b. Outstanding checks not yet recorded by the bank
c. Bank charges not yet recorded by the depositor
d. Deposit in transit not yet recorded by the bank

14. If the cash balance shown in the bank’s record is less than the correct cash balance and
neither the bank nor the depositor has made any errors, there must be
a. Bank credit memo not yet recorded by the depositor
b. Outstanding checks not yet recorded by the bank
c. Bank charges not yet recorded by the depositor
d. Deposit in transit not yet recorded by the bank

15. The following reconciling items are deducted from the book balance of cash in order to
arrive at the unadjusted bank balance of cash
a. Outstanding checks
b. Deposit in transit
c. Proceeds of note collected by the bank
d. Interest on note collected

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In preparing its August 31, 2021 bank reconciliation, Kirk Corp. has available following
information:
Balance per bank statement, 8/31/21 P18,050
Deposit in transit, 8/31/21 3,250
Return of customer’s check for insufficient funds, 8/29/21 600
Outstanding checks, 8/31/21 2,750
Bank service charges for August 100
Check disbursement recorded in August (correct amount is P5,000) 500
Kirk deposited P15,000 in August but credited by bank at 1,500

1.What is the unadjusted balance per book on August 31, 2021?

a. P37,250
b. P35,050
c. P32,050
d. P28,250

Health Company established as petty cash fund of P12,000. Details of the PCF are as follows:

Unreplenished expense vouchers:

Date Payee Description Amount

12/21/2021 Coffee Bean Coffee and pastries P1,400

12/26/2021 Anytime Pitnes Zumba for employees 1,200

12/28/2021 Frap, Employee Advances for business trip 1,500

12/30/2021 Honest Bee Meals 1,300

01/02/2022 Bonds and Papers Office Supplies 2,800

01/03/2022 Mr. Taxi U Transportation 1,550

The count of remaining bills and coins in the petty cash box were as follows:

Bills Counted Coins Counted

P100 2 pieces P1.00 20 pieces

50 3 pieces 0.50 500 pieces

20 4 pieces 0.25 200 pieces

A replenishment check amounting to P1,500 was also found inside the petty cash box.

2.How much is the balance of petty cash fund reported in its December 31, 2021
statement of financial position?
a. 2,250
b. 5,100
c. 6,600
d. 7,100

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INUTZ Corporation’s petty cash fund on December 31, 2022 is composed of the following:

Coins and Currencies 16,000

Petty Cash Vouchers for Postage Stamps of 1,000 and
Office Supplies of P8,000 9,000
Customer’s check returned by the bank as NSF 4,000
Check drawn by the company payable to the petty cash custodian 15,000
Envelope that contains coins and bills representing personal
contributions of employees for Covid19 victims 5,000
Unused Postage Stamps 1,000
Employee’s Checks 3,000
Employee’s Postdated Checks 2,000

The petty cash ledger has an imprest balance of P50,000.

3. Compute for the adjusted balance of the Petty Cash Fund on December 31, 2020.
a. 39,000 c. 41,000
b. 34,000 d. 31,000

4. Compute for the cash shortage.

a. 0 c. 4,000
b. 1,000 d. 5,000

The books of Colorado Company disclosed a cash balance of P687,570 on December 31, 2021.
The bank statement as of December 31 showed a balance of P 547,800. Additional information
that might be useful in reconciling the two balances follows:
• Check number 748 for P30,000 was erroneously recorded on the books as P45,000.
• A customer’s note was dishonored on December 29 (maturity date). The bank charged
Colorado’s account for P142,650, including a protest fee of P2,650.
• The deposit of December 24 was recorded on the books as P28,950, but it was actually
a deposit of P27,000.
• Outstanding checks totaled P98,850 as of December 31.
• There were bank service charges for December of P2,100 not yet recorded on the
books.
• Colorado’s account had been charged on December 26 for a customer’s NSF check for
P12,960.
• Colorado properly deposited P6,000 on December 31 that were not yet reflected in the
bank statement.
• Receipts of December 31 for P134,250 were recorded by the bank on January 2.
• A bank memo stated that a customer’s note for P45,000 and interest of P1,650 had
been collected on December 27, and the bank charged a P360 collection fee.

5.How much is the adjusted Cash in Bank on December 31, 2021?

a. P583,200
b. P577,200
c. P589,200
d. P512,400

6.How much is the net adjustment to cash in bank account on December 31, 2021?
a. P104,370
b. P110,370
c. P 98,370
d. P175,170

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On December 31, 2022, the cash account of Shop Company shows the following composition:
Petty cash fund, P180,000; Cash in bank (payroll fund), P2,000,000; Interest and dividend
fund, P250,000; Tax fund, P120,000; Cash in bank (current account), P3,000,000; Certificate
of deposit (terms 90 days), P1,000,000; Certificate of deposit (terms 180 days), P1,500,000;
Cash in foreign bank-restricted, P500,000; Money market fund, (60 days), P500,000; Money
market funds (6 months), P900,000; Customer’s check dated February 15, 2023, P60,000;
Customer’s check dated December 30, 2022 returned for lack of funds, P40,000; A 30-day BSP
treasury bill, P1,000,000; A 3-year BSP treasury bill acquired three months prior to maturity,
P1,200,000; Sinking fund cash, P800,000;Contingent fund, P900,000; Fund for the acquisition
of fixed asset, P500,000; Travelers’ checks, P60,000; and Cashiers’ checks, P100,000.

7.What is the correct cash and cash equivalents balance to be reported by Shop
Company on December 31, 2022?
a. P9,410,000
b. P9,320,000
c. P9,170,000
d. P9,780,000

Casio Company had an unadjusted cash balance in its cash in BDO Bank as of December 31,
2021 of P2,100,000, the following transactions were recorded in this account as of
12/31/2021:
• Check payable to Casio dated January 3, 2022 was recorded as receipts as of December
31, P145,000.
• Check payable to Casio amounting to P210,000 dated December 27, 2021 recorded as
receipts on 12/27 and returned by bank on 12/29 marked as “NSF” and was
immediately redeposited on 12/30. The return of the check was not recorded on 12/29
but the redeposit was recorded as receipts on 12/30.
• Check payable to Grab (a supplier), dated January 2, 2022 was delivered on December
30, 2021 amounting to P120,000.

8. What is the correct balance of cash in BDO bank as of December 31, 2021?
a. P2,075,000
b. P1,865,000
c. P1,745,000
d. P1,625,000

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