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University of San JoseRecoletosJUNIOR PHILIPPINE INSTITUTE OF ACCOUNTANTS

Quizbowlers Society

Tutorial SessionConceptual Framework and Cash And Cash Equivalents

1. Accounting is the process of identifying, measuring and communicating economic information to permitinformed judgment and decision of users of the information. This definition is provided by:

a) Accounting Standards Council (ASC)b) American Institute of Certified Public Accountants (AICPA)c) International Accounting Standards Board (IASB)d) American Accounting Association (AAA)

2. Which of the following is NOTa purpose of the Conceptual Framework?a) To assist the Board of Accountancy in promulgating rules and regulations affecting the practice

of Accountancy in the Philippinesb) To assist the preparers of financial statementsc) To assist users of financial statementsd) To assist the FRSC in its review and adoption of existing International Financial Reporting

Standards

3. The information provided by financial reporting pertains toa) Individual business enterprises, rather than to industries or an economy as a whole or to

members of society as consumers.b) Business industries, rather than to individual enterprises or an economy as a whole or to

members of society as consumersc) Individual business enterprises industries, and an economy as a whole, rather than to members

of society as consumersd) An economy as a whole and to members of society as consumers, rather than to individual

enterprises or industries

4. Which of the following statements concerning the framework is INCORRECT?a) The framework is concerned with general-purpose financial statements including consolidated

financial statementsb) Special purpose financial reports, for example, prospectuses and computations prepared for

taxation purposes, are within the scope of the frameworkc) The framework is not a Philippine Financial Reporting Standard and hence does not define

standard for any particular measurement or disclosure issue.d) In case there is a conflict, the requirements of Philippine Financial Reporting Standard shall

prevail over the Conceptual Framework

5. The misstatement or omission of financial information could influence the economic decision that theusers make on the basis of the financial statements. This concept is called:

a) Adequate disclosure c) Materiality

b) Completeness d) Free from error

6. Information about different entities and about different periods of the same entity can be prepared andpresented in a similar manner. Comparability and consistency are related to which of these objectives?

Comparability Consistencya) Entities Entitiesb) Entities Periodsc) Periods Entitiesd) Periods Periods

7. Which of the following is within the scope of the Conceptual Framework?I. Objective of Financial Reporting

II. Quantitative characteristics of useful financial informationIII. Definition, recognition and measurements of elements form which financial statements are

construedIV. Concepts of capital and capital maintenance

a) I, II, III, IV c) II, III, IVb) I, II, III d) I, III, IV

8. Completeness, neutrality and free from error are ingredients ofRelevance Faithful Representation

a) Yes Yes

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b) No Noc) Yes Nod) No Yes

9. The following statements about accounting standards are correct, EXCEPTI. International Financial Reporting Standards (IFRS) correspond to Statement of Financial

Accounting Standards (SFAS) in the PhilippinesII. International Accounting Standards (IAS) correspond to Philippine Accounting Standards (PAS)

III. Accounting standards include Interpretations of the IFRS Interpretations Committee and theStanding Interpretations Committee

a) Statement I c) Statement IIIb) Statement II d) All of the above statements are correct

10. Which of the following statements is FALSE?a) The definition of revenue encompasses income and gainsb) Revenue arises in the course of ordinary regular activities and is referred to by a variety of

different names including sales, fees, interests and dividends, royalties and rent.c) Gains represent other items that meet the definition of income and do not arise in the ordinary

course of businessd) The definition of expenses encompasses losses as well as those expenses that arise in the

course of ordinary regular activities.

11. Which of the following statements about the recognition principles is TRUE?a) An asset is recognized when it is probable that an increase in economic benefits has arisen

related to an increase in another asset or decrease in liability and that the increase can bemeasured reliably

b) A liability is recognized when it is probable that a decrease in future economic benefits hasoccurred as a result of a decrease in asset or an increase in another liability

c) An asset is recognized when it is possible that future economic benefits will flow to the entityand the amount of inflow can be measured reliably.

d) A liability is recognized when it is probable that an outflow of economic benefits will be requiredfor the settlement of a present obligation and the outflow can be measured reliably.

12. The following statements regarding the applications of the principle are correct EXCEPTI. Cause and effect association: Sales commissions, debiting cost of sales when an item of

merchandise is soldII. Immediate recognition: Salaries expense, recognition of loss from sale of property

III. Systematic and rational allocation: Depreciating property, allocation of prepaid expensesa) Statement I c) Statement IIIb) Statement II d) All of the above statements are correct

13. Which of the following items isNOTconsidered part of cash and cash equivalents?a) Bank draftsb) NSF checks received that subsequently cleared before the reporting period ended

c) Bond sinking fund cash, maturing 12 months after the end of the reporting periodd) Insurance fund

14. If the cash balance shown on an entitys accounting records is less than the correct cash balance andneither the entity nor the bank has made any errors, then there must be

a) Deposits in transitb) Deposits credited by the bank but not yet recorded by the entityc) Outstanding checksd) Debit memos

15. Which of the choices best describes the following statements?I. Deposits in transit and credit memos are treated as deductions to Balance per bank and

Balance per book respectivelyII. The cash balance reported in the bank statement must be the balance reported in the balance

sheet since the bank statement is more reliable compared to the entitys accounting records III. The adjusting entries for a bank reconciliation may include a debit to office expense for service

chargesIV. Bank service charge will cause balance per ledger to be higher than that reported by the bank,

all other things being equal

a) Statements I and II are not true c) Only Statement III is falseb) Only Statement II is not true d) All statements are false

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16. Captivating Inc. had the following account balances at December 31, 2011.Cash in bankI Bank P 50,000Cash in bankLove Bank (closed by the BSP) 60,000Savings depositYou Bank 150,000Petty cash fund, including unreplenished December 2011 petty

cash expense vouchers for P5,000 and an accommodatedemployee check for P3,500 dated January 28, 2014 10,000

Treasury bills, purchased December 10, 2013and due March 10, 2014 1,000,000

Time deposit, one year, due January 3, 2014 2,000,000

The amount to be shown as Cash and cash equivalents on Captivatings balance sheet at December31, 2013 is

a) P1,201,500 b) P3,201,500 c) P1,210,000 d. P1,206,500

17. Humorous, Inc. cash account shows a balance of P45,000 before reconciliation. The bank statementdoes not include a deposit of P2,300 made on the last day of the month. The bank statement shows acollection by the bank of P940 and a customer's check for P320 was returned because it was NSF. Acustomer's check for P450 was recorded on the books as P540, and a check written for P79 wasrecorded as P97. The correct balance in the cash account isa. P45,512. b. P45,548. c. P45,728. d. P47,848

18.Attractive Corporations checkbook balance on December 31, 2013, was P180,000. In addition, Chrisheld the following items in its safe on December 31.

Check payable to Chris, dated January 2, 2014, not includedin December 31, checkbook balance. P45,000

Check payable to Chris, deposited December 20, and includedin December 31, checkbook balance, but returned by

bank on December 30, stamped NFS. The check wasredeposited January 2, 2014, and cleared January 7 46,000

Postage stamps received from mail-order customers 2,000Check drawn on Chriss account, payable to a vendor, dated

and recorded December 31, but not mailed until January 15, 2014. 63,000

The proper amount to be shown as Cash on Attractives balance sheet at December 31, 2013 isa. P244,000 b. P208,000 c. P242,000 d. P197,000

19. Responsible Companys petty cashimmediately after the close of business on September 30, 2013, theend of the companys fiscal year is composed of the following:

Currency and coins P15,000Unused postage stamps 500Petty cash vouchers:

Delivery expense P1,500Postage stamps expense 800Office supplies expense 500Repairs expense 750

Advances to employees 1,750 5,300A check drawn by the company payable to the

order of Miss C.A.Y., petty cashcustodian representing her salary 14,000

An employees check returned by the bank forinsufficiency of funds 4,000

A sheet of paper with names of several employeestogether with their contribution for a departing employee

Attached to the sheet of paper is currency of 5,000P43,800

The petty cash general ledger account has an imprest balance of P40,000.

The petty cash short or over to be recorded and correct petty cash to be shown in the 2013 Statementof Financial Position by Responsible Company is

a. P1,700 overage, Petty Cash of P15,000 c. P3,800 overage, Petty Cash of 29,000b. P1,700 shortage, Petty Cash of 29,000 d. P3,800 overage, Petty Cash of 15,000

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20. Irresistible Company cash per ledger showed a balance at December 31, 2013 of P13,697,000 whichwas determined to consist of:Petty cash fund P 10,000Undeposited receipts, including a postdated customer check

of P25,000 60,000Cash in Cedric Bank, per bank statement, with a check

for P30,000 still outstanding 1,500,000Overdrawn current account- Val Bank (10,000)Bond sinking fund- Cash 200,000Vouchers paid out of collections, not yet recorded 23,000IOUs signed by employees, taken from collections 14,000Money market placementNaranjo Bank 1,000,000Time depositIs Your Bank3 years 500,000Cash in BankExaminer Bank 400,000Cash in BankBeware Bank (restricted account for building

construction expected to be disbursed in 2014) 10,000,000Total Cash, December 31, 2013 P13,697,000

Cash in Cedric Bank includes P700,000 of compensating balance against short-term borrowingarrangement at December 31, 2013. The compensating balance is legally restricted as to withdrawal byIrresistible Co.

Cash in bankExaminer Bank is net of a P20,000 check dated January 10, 2014 in payment of accountspayable, mailed on December 29, 2013.

The correct amount of Cash to be shown as current assets on the December 31, 2013 balance sheet ofIrresistible Co. should be

a. P1,215,000 b. P1,235,000 c. P11,225,000 d. P1,245,000

21. Stunning Companys accountsshowed the following facts on August 31, 2013

Balance of cash in bank account 1,300,000Balance per bank statement 1,200,000Oustanding checks, August 31:

Number 555 10,000Number 761 55,000Number 762 40,000Number 763 25,000Number 764 65,000Number 765 50,000

Receipts of August 31, deposited September 1 275,000Service charge for August 5,000NSF Check received from a customer 85,000

The cashier-bookkeeper had misappropriated P30,000 and an additional P10,000 by charging salesdiscounts and crediting accounts receivable.

The stub for check number 765 and the invoice related thereto show that it was for P50, 000. It wasrecorded incorrectly in the cash disbursement journal for 70,000. The check was drawn in payment ofan account payable.

Payment has been stopped on check number 555 which was drawn in payment of an account payable.The payee cannot be located.

What is Stunning Companys adjustedcash in bank on August 31, 2013?

a) 1,240,000 b) 1,230,000 c)1,210,000 d) 1,200,000

22. Simple Companys ledgershows a cash in bank balance of P1,752,500 as of December 31, 2013. Thebank statement however, shoes a balance of P2,090,000 at the same date. The only reconciling itemsconsist of a bank service charge of P2,000, outstanding checks of P690,000 and a deposit in transit.How much is the deposit in transit in the December 31 bank reconciliation?

a) 150,000 b) 350,000 c) 692,000 d) 290,000

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23. Enigmatic Companysbank reconciliation showed the following information for August:

Checks and charges recorded by bank in August(including August service charge of P300) P172,100

Service charge made by bank in July andrecorded on the books in August 200

Total of all credits to cash in all journals during August 198,020Customer NSF check returned as a bank charge in August

(no entry made in the books) 1,000Customers NSF check returned in July and redeposited in August

(no entry made in both July and August) 2,500Outstanding checks at August 31 80,600Deposit in transit for August 6,000

What were the total outstanding checks at the beginningof August?a) P 33,600 c) P53,580b) P 45,600 d) 60,200

24. Youthful, Inc. had the following bank reconciliation at March 31, 2013:

Balance per bank statement, 3/31/13 P37,200Add: Deposit in transit 10,300

47,500Less: Outstanding checks 12,600Balance per books, 3/31/13 P34,900

Data per bank for the month of April 2013 follow:Deposits P46,700Disbursements 49,700

All reconciling items at March 31, 2013 cleared the bank in April. Outstanding checks at April 30, 2013totaled P6,000. There were no deposits in transit at April 30, 2013. What is the cash balance per books at

April 30, 2013?

a. P28,200 b. P31,900 c. P34,200 d. P38,500

25. Understanding Companys bank reconciliation for the month of May is shown below:

Balance per bank statement P1,050,000Deposit in transit 150,000Checks outstanding (15,000)Correct cash balance P1,185,000

Balance per book P1,186,000Bank service charge (1,000)Correct cash balance P1,185,000

June data are follows:Bank Book

Checks recorded P1,150,000 P1,180,000Deposit recorded 810,000 900,000Collection by bank (P200,000 note plus interest) 210,000 ----NSF check returned with June 30 bank statement 5,000 ----Balances 915,000 905,000

What are the total outstanding checks, deposits in transit and adjusted cash balance as of June 30?

Oustanding Checks Deposits in transit Adjusted Cash Balancea) 45,000 90,000 1,120,000b) 45,000 240,000 1,110,000c) 45,000 60,000 630,000d) 30,000 500,000 730,000