Cash and Cash Equivalents Flashcards
- Which statement is true?
a. Certificates of deposit are usually classified as cash on the statement of financial position.
b. Companies include postdated checks and petty cash funds as cash.
c. Cash equivalents are investments with original maturities of six months or less.
d. Savings accounts are usually classified as cash on the statement of financial position.
d. Savings accounts are usually classified as cash on the statement of financial position.
- Which statement is incorrect regarding cash equivalents?
a. Cash equivalents are held for the purpose of meeting short-term cash commitments rather than investment for other purposes
b. An investment normally qualifies as a cash equivalent only when it has a short maturity of, say, three months or less from the date of acquisition.
c. Both a and b.
d. Neither a nor b.
d. Neither a nor b.
- Which of the following may qualify as cash equivalents?
a. Investment in ordinary shares
b. Investment in share options
c. Investment in preference shares acquired within a short period of their maturity and with a specified redemption date
d. None of these
c. Investment in preference shares acquired within a short period of their maturity and with a specified redemption date
- The following data pertain to Pauline Corporation on December 31, 2020:
Current account at Metrobank 900,000 Current account at Allied Bank (50,000) Payroll account 250,000 Foreign bank account (in equivalent pesos) 400,000 Savings deposit in a closed bank 75,000 Postage stamps 500 Employee’s postdated check 2,000 IOU from employees 5,000 Credit memo from a vendor for a purchase return 10,000 Traveler’s check 25,000 Money order 15,000 Petty cash fund (P2,000 in currency and expense receipts for P3,000) 5,000 Pension fund 1,000,000 DAIF check of customer 7,500 Customer’s check dated 1/1/21 40,000 Time deposit – 30 days 100,000 Money market placement (due 6/30/21) 250,000 Treasury bills, due 3/31/21 (purchased 12/31/20) 100,000 Treasury bills, due 1/31/21 (purchased 2/1/20) 150,000 The cash and cash equivalents as of December 31, 2020 is
a. P1,392,000
b. P1,542,000
c. P1,892,000
d. P1,792,000
d. P1,792,000
- Claire Corporation had the following account balances at December 31, 2020:
Cash on hand and in bank 1,250,000
Cash restricted for bonds payable due on June 30, 2021 500,000
Time deposit 1,500,000
Savings deposit set aside for dividends payable on June 30, 2021 250,000
The total amount to be reported as cash and cash equivalent as of December 31, 2020 is
a. P3,500,000
b. P3,000,000
c. P3,250,000
d. P2,750,000
a. P3,500,000
- On December 31, 2020, Allan Company had the following cash balances:
Cash in bank P7,500,000
Petty cash fund 25,000
Time deposit 2,500,000
Saving deposit 1,000,000
Cash in bank includes P250,000 of compensating balance against short term borrowing arrangement at December 31, 2020. The compensating balance is legally restricted as to withdrawal by Allan. A check of P150,000 dated January 15, 2021 and in payment of accounts payable was recorded and mailed on December 31, 2020. In the current assets section of the December 31, 2020statement of financial position, what amount should be reported as “cash and cash equivalents”?
a. P10,925,000
b. P8,425,000
c. P10,900,000
d. P7,425,000
a. P10,925,000
- A petty cash system
a. Cash checks for employees
b. Handle cash sales
c. Account for all cash receipts and disbursements
d. Pay small miscellaneous expenses
d. Pay small miscellaneous expenses
- Which of the following is true regarding the imprest petty cash system?
a. Entries are made to the Petty Cash account only to increase or decrease the size of the fund
b. The Petty Cash account is debited when the fund is replenished.
c. The imprest petty cash system in effect adheres to the rule of disbursement by check.
d. All of these are not true.
c. The imprest petty cash system in effect adheres to the rule of disbursement by check.
- A cash short or over account
a. Is not generally accepted
b. Is debited when the petty cash fund proves out over
c. Is debited when the patty cash fund proves out short
d. Is a contra account to cash
c. Is debited when the patty cash fund proves out short
- On December 31, 2020, the cash account of Minerva Company has a debit balance of P1,750,000. An analysis if the cash account shows the following details:
Undeposited collections 30,000
Cash in bank – PCIB checking account 250,000
Cash in bank – PNB (overdraft) (25,000)
Undeposited NSF check received from a
customer, dated December 1, 2020
7,500
Undeposited check from a customer, dated
January 15, 2021
12,500
Cash in bank – PCIB (fund for payroll) 75,000
Cash in bank – PCIB (savings deposit) 50,000
Cash in bank – PCIB (money market instrument,
90 days)
1,000,000
Cash in foreign bank (restricted) 50,000
IOUs from officers 15,000
Sinking fund cash 225,000
Listed stock held as temporary investment 60,000
P1,750,000
Cash and cash equivalents on Minerva’s December 31, 2020 statement of financial position should be
a. P1,380,000
b. P1,405,000
c. P1,442,500
d. P1,467,500
b. P1,405,000
- Rosimlyn Corporation’s checkbook balance on December 31, 2020, was P400,000. In addition, Rosimlyn held the following items in its safe on December 31:
Check payable to Rosimlyn Corporation, dated January 2, 2021, not
included in December 31 checkbook balance
P100,000
Check payable to Rosimlyn Corporation, deposited December 20,
and included in December 31 checkbook balance, but returned by bank on December 30, stamped “DAIF”. The check was
redeposited January 2, 2021, and cleared January 7.
20,000
Check drawn on Rosimlyn Corporation’s account payable to a vendor, dated and recorded December 31, but not mailed until January 15, 2021
50,000
The proper amount to be shown as cash on Rosimlyn’s statement of financial position at December 31, 2020, is
a. P380,000
b. P400,000
c. P430,000
d. P487,500
c. P430,000
- Joann Co.’s ledger showed a balance in its cash account at December 31, 2016 of P682,250 which was determined to consist of the following:
Petty cash fund P3,600
Cash per bank statement with a check for P6,000
still outstanding
336,750
Notes receivable in the possession of a collecting
agency
25,000
Undeposited receipts, including postdated check
for P10,500 and traveler’s check for P10,000
178,000
Bond sinking fund – cash 127,500
IOUs signed by employees 4,950
Paid vouchers not yet recorded 6,450
Total P682,250
At what amount should “Cash on hand and in bank” be reported on Joann’s balance sheet?
a. P534,750
b. P501,850
c. P662,250
d. P629,350
b. P501,850
- The following items were included as cash in the books of Wama Co.:
Checking account at Security Bank (P2,400)
Checking account at BPI 10,670
Checking account at Citytrust used for payment
of salaries
11,000
Postage stamps 214
Employee’s post-dated check 4,600
I.O.U. from an employee 400
A check marked “DAIF” 2,500
Postal money order 1,000
Petty cash fund (P648 in expense receipts) 1,000
Certificate of time deposit with BPI 10,000
A gold ring surrendered as security by a
customers who lost his wallet (at market value)
3,000
The correct amount that should be reported as cash is a. P23,670
b. P22,022
c. P33,022
d. P23,022
d. P23,022
- If the cash balance shown on in a company’s bank statement is more than the correct cash balance and neither the company nor the bank has made any errors, there must be
a. Deposits in transit
b. Outstanding checks
c. Bank charges not yet recorded by the entity
d. Deposits credited by the bank but not yet recorded by the entity
d. Deposits credited by the bank but not yet recorded by the entity
- If the cash balance shown in a company’s accounting records is more than the correct cash balance and neither the company nor the bank has made any errors, there must be
a. Deposits in transit
b. Outstanding checks
c. Bank charges not yet recorded by the entity
d. Deposits credited by the bank but not yet recorded by the entity
c. Bank charges not yet recorded by the entity
or b. Outstanding checks
