ASSIGNMENT

Question 1

Money, whether restricted or not, is presented as cash.

Question 2

Postdated checks received from customers are reverted from cash back to receivable.

Question 3

An investment in debt securities that is acquired 3 months or less before maturity date is presented as cash equivalent.

Question 4

Checks drawn that are postdated should be reverted back to cash even if the checks are already delivered to the payees.

Question 5

Entity A acquired debt securities 2 years ago. At the reporting, date, the debt securities have a remaining term of 2 months. Entity A can present the debt securities as cash equivalents.

Question 6

Compensating balances that are legally restricted as to withdrawal by the borrower are excluded from cash.

Question 7

For best internal control, the duties of cash custody, cash disbursements authorization and cash recording should be delegated to one and same personnel.

Question 8

The “Petty Cash Fund” account is credited each time a petty cash disbursement is made.

Question 9

An entity’s petty cash fund (PCF) has an imprest balance of P100. At the end of the period, the PC consists of ₽20 coins and currencies. To replenish the PCF, the entity should write a check amounting to P80.

Question 10

An entity’s PCF has an imprest balance of P100. At the end of the period, the PC includes P30 unreplenished disbursements. The amount of PCF to be reported in the financial statements is ₽70.

Question 11

Which of the following should not be included in cash?

a. postdated checks drawn and delivered to payees

b. checks drawn but not yet delivered to the payees

c. postdated checks received from customers

d. cash collections not deposited at year-end

Question 12

On October 31, 20x1, Entity A had cash accounts at three ditterent banks. One account balance is segregated solely for a November 15, 20x] payment into a bond sinking fund. A second account, used for branch operations, is overdrawn. The third account, used for regular corporate operations, has positive balance. How should these accounts be reported in Entity A’s October 31, 20x1 classified balance sheet?

a The segregated account should be reported as a noncurrent asset, the regular account should be reported as a current asset, and the overdraft should be reported as a current

b. The segregated and regular accounts should be reported as current assets, and the overdraft should be reported as a current liability.

c. The segregated account should be reported as a noncurrent asset, and the regular account should be reported as a current asset net of the overdraft.

d. The segregated and regular accounts should be reported as (AICPA) current assets net of the overdraft.

Question 13

A debt security can qualify as a cash equivalent if

a. it has a remaining maturity of 3 months or less as at the reporting date.

b. it is acquired 3 months or less before its maturity date.

c. it has an original maturity of 3 months or less.

d. All of these

Question 14

Which of the following may be properly presented undet statement of financial position? “Cash and Cash Equivalents” in the December 31, 20x1

a. Treasury bills acquired on December 1, 20x1 and maturing on March 31, 20x2.

b. Customer’s check dated January 1, 20x2 and mailed to the bank for deposit on December 31, 20x1.

c. Shares of stocks to be sold on the first week of January 20x2; a purchase commitment is already obtained.

d. Redeemable preference shares acquired three months prior to the redemption date.

Question 15

A compensating balance that is legally restricted as to withdrawal is

a. excluded from cash.

b. included in cash.

c. disclosed in the notes.

d. a and c

Question 16

The effect of compensating balance is

a. to provide greater security for the borrower.

b. to decrease the yield on the loan to the lender.

c. to increase the yield on the loan to the borrower.

d. to increase the yield on the loan to the lender.

Question 17

For effective internal control over the disbursement of payroll checks, an enterprise makes a specific amount of cash available in a checking account for this limited purpose. The type of account used for this purpose is called an)

a. General checking account.

b. Imprest bank account.

c. Lockbox account.

d. Compensating balance.

Question 18

It is a business document or written authorization that supports every disbursement made by an entity.

a. Check

c. Voucher

b. Currency

d. Cash equivalent

Question 19

Which of the following is not an appropriate procedure for controlling the petty cash fund?

a. The petty cash custodian files receipts by category of expenditure after their presentation to the general cashier so that variations in different types of expenditures can be monitored.

b. Surprise counts of the fund are made from time to time by a superior of the petty cash custodian to determine that the fund is being accounted for satisfactorily.

c. The petty cash custodian obtains signed receipts from each individual to whom petty cash is paid.

d. Upon receiving petty cash receipts as evidence of disbursements, the general cashier issues a company check to the petty cash custodian, rather than cash, to replenish
the fund.

Question 20

Which of the following statements is incorrect?

a. For best internal control, all cash collections must be deposited intact, while all cash disbursements must be made directly out of the bank account, except for petty cash disbursements.

b. All disbursements must be properly supported by a disbursement voucher.

c. The voucher system is an internal control over cash disbursements but not for cash receipts.

d. A journal entry is made each time a disbursement is made out of the petty cash fund.