INTERMEDIATE ACCOUNTING

Question 1

From the point of view of a layman, ___ simply means money

Answer 1

Cash

Question 2

It is the standard medium of exchange in business transactions

Answer 2

Money

Question 3

This refers to the currency and coins which are in circulation and legal tender

Answer 3

Money

Question 4

Cash includes (what are the 3) because these are acceptable by the bank for deposit or immediate encashment

Answer 4

Checks
Bank drafts
Money orders

Question 5

______ checks received cannot be considered as cash yet because this are unacceptable by the bank for deposit and immediate credit or outright encashment

Answer 5

Postdated

Question 6

This is a short-term and highly liquid investments that are readily convertible into cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rate

Answer 6

Cash equivalents

Question 7

To be reported as cash, an item must be ____ in use.

Answer 7

Untestricted

Question 8

An entity shall classify as current when the asset is cash or a cash equivalent unless it is ______ to settle a liability for more than twelve months after the end of the reporting period

Answer 8

Restricted

Question 9

This is cannot qualify as cash equivalents because shares do not have a maturity date

Answer 9

Equity securities or equity investments

Question 10

Preference shares with specified redemption date and acquired three months before redemption date can qualify as _____

Answer 10

cash equivalents

Question 11

What is important is the date of purchase which should be ________ before maturity

Answer 11

three months or less

Question 12

A BSP treasury bill that was purchased one year ago cannot qualify as _____ even if the remaining maturity is three months or less from the end of reporting period

Answer 12

cash equivalent

Question 13

Classification of investments

If the term is three months or less, such instruments are classified as ______

Answer 13

Cash Equivalents

Question 14

Classification of investments:

If the term is more than three months but within one year, such investments are classified as ____and presented separately as current assets

Answer 14

short-term or temporary investments

Question 15

Classification of investments

If the term is more than one year, such investments are classified as ___

Answer 15

non-current or long-term investments

Question 16

Investments that become due within one year from the end of the reporting period are reclassified as ___

Answer 16

current

Question 17

Cash is measured at _____

Answer 17

face value

Question 18

A ____ set aside for the payment of a bond payable shall be classified as current asset when the bond payable is already due within one year after the end of reporting period

Answer 18

sinking fund

Question 19

A ______ set aside for the acquisition of a noncurrent asset should be classified as noncurrent regardless of the year of disbursement

Answer 19

cash fund

Question 20

A ______ is classified as a current liability and should not be offset against other bank accounts with debit balances

Answer 20

bank overdraft

Question 21

It is a undeposited cash collections, customers’ checks, cashier’s or manager’s checks, traveler’s checks, bank drafts, money orders

Answer 21

Cash on hand

Question 22

It includes the demand deposit or checking account, saving deposit which are unrestricted as to withdrawal.

Answer 22

Cash in bank

Question 23

It is a fund where it is set aside for current purposes (petty cash fund, payroll fund, dividend fund)

Answer 23

Cash fund

Question 24

This check is one that is merely drawn and recorded but not given to the payee before the end of reporting period.

• There is no payment when the check is pending delivery to the payee at the end of reporting period. The reason is that this check is still subject to the entity’s control and may thus be canceled anytime before delivery at the discretion of the entity.

Answer 24

Undelivered or unreleased check

Question 25

This check delivered is a check drawn, recorded and already given to the payee but it bears a date subsequent to the end of reporting period.

Answer 25

Postdated Check

Question 26

A type of check where is a check not encashed by the payee within a relatively long period of time. The question is how long a time must the check remain outstanding.

• In banking practice, a check becomes stale if not encashed within six months from the time of issuance. Of course, this is a matter of entity policy

Answer 26

Stale Check

Question 27

Is a system of control of cash which requires that all cash receipts should be deposited intact and all cash disbursements should be made by means of check.

• While internal control ideally requires that all payments should be made by means of check, this is sometimes impossible.

Answer 27

Imprest system

Question 28

The _____ is money set aside to pay small expenses which cannot be paid conveniently by means of check.

There are two methods of handling the petty cash, namely:

a. Imprest fund system
b. Fluctuating fund system

Answer 28

Petty Cash Fund

Question 29

The accounting for petty cash is called ____ because the checks drawn to replenish the fund do not necessarily equal the petty cash disbursements.

The replenishment checks are simply drawn upon the request of the petty cashier.

Moreover, petty cash disbursements are immediately recorded thus resulting in a balance per book from time to time

Answer 29

Fluctuating Fund System

Question 30

There are three kinds of bank deposits, namely _____

Answer 30

Demand deposit
Saving deposit
Time deposit

Question 31

The ____ is the current account or checking account or commercial deposit where deposits are covered by deposit slips and where funds are withdrawable on demand by drawing checks against the bank.

• It is usually non-interest bearing.

Answer 31

Demand Deposit

Question 32

In a ______, the depositor is given a passbook upon the initial deposit. The passbook is required when making deposits and withdrawals.

• Withdrawals are made anytime but the bank sometimes may require notice of withdrawal.
• It is interest bearing.

Answer 32

Saving deposit

Question 33

It is a evidenced by a formal agreement embodied in an instrument called certificate of deposit

Answer 33

TIME DEPOSIT

Question 34

This is may be pre-terminated or withdrawn on demand or after a certain period of time agreed upon.

Also it is similar to saving deposit in the sense that it is interest bearing

Answer 34

Time Deposit

Question 35

a statement which brings into agreement the cash balance per book and cash balance per bank.

Answer 35

BANK RECONCILIATION

Question 36

a monthly report of the bank to the depositor

Answer 36

BANK STATEMENT

Question 37

checks issued by the depositor and paid by the bank during the month

Answer 37

CANCELED CHECKS

Question 38

3 BOOK RECONCILING ITEMS

Answer 38

Credit memos
Debit Memos
Errors

Question 39

3 BANK RECONCILING ITEMS

Answer 39

Deposits in transit
Outstanding checks
Errors

Question 40

Items not representing deposits credited by bank to the account of the depositor but not yet recorded by depositor as cash receipts.

Answer 40

CREDIT MEMOS

Question 41

have the effect of increasing the bank balance.

Answer 41

CREDIT MEMOS

Question 42

Items not representing checks paid by bank which are charged or debited by the bank to the account of depositor but not yet recorded by depositor as cash disbursements.

And have the effect of decreasing the bank balance.

Answer 42

DEBIT MEMOS

Question 43

checks deposited but returned by the bank because of insufficiency of fund.

Answer 43

NO SUFFICIENT FUND CHECKS

Question 44

collections already recorded by the depositor as cash receipts but not yet reflected on the bank statement.

Answer 44

DEPOSITS IN TRANSIT

Question 45

checks already recorded by the depositor as cash disbursements but not yet reflected on the bank statement.

Answer 45

OUTSTANDING CHECKS

Question 46

one where the bank has stamped on its face the word “accepted” or “certified” indicating sufficiency of fund.

Answer 46

CERTIFIED CHECKS

Question 47

The book balance and the bank balance are brought to a correct cash balance that must appear on the balance sheet.

Answer 47

ADJUSTED BALANCE METHOD

Question 48

the book balance is reconciled with the bank balance or the book balance is adjusted to equal the bank balance

Answer 48

BOOK TO BANK METHOD

Question 49

the bank balance is reconciled with the book balance or the bank balance is adjusted to equal the book balance.

Answer 49

BANK TO BOOK METHOD