ADAMSON UNIVERSITY

CASH EXERCISE

1. Which of the following is not considered cash for financial reporting purposes?
a) petty cash and change funds
b) money order, travelers’ checks
c) coins, currency, & available funds
d) postdated checks & IOU’s

2. Cash on Hand and In Bank on the statement of financial position excludes

a) checks drawn before the reporting date but held for later delivery to creditors
b) petty cash fund and change fund
c) US dollars deposited in a foreign currency depository account
d) cash reserved for acquisition of fixed assets

3. A bank overdraft should be

a) reported as a deduction from current assets section
b) reported as a deduction from cash
c) reported as a current liability when there is no valid basis for offsetting against another
bank account
d) ignored

4. Under which classification is “Cash Restricted for Payment of Long-term Obligations” reported?
a) Current Assets
b) Non-Current Assets
c) Current Liabilities
d) Non-Current Liabilities

5. A petty cash system is designed to

a) cash checks for employees
b) handle cash sales
c) account small cash receipts and disbursements
d) pay small miscellaneous expenses

6. A Cash Short or Over account is

a) not generally accepted
b) debited when petty cash fund proves out over
c) debited when petty cash fund proves out short
d) a contra account to Petty Cash Fund

7. Which of the following is not true

a) The imprest petty cash system in effect adheres to the rule of disbursement by check
b) Entries are made to the Petty Cash account only to increase or decrease the size of the fund or to
adjust the balance if not replenished at year-end
c) The Petty Cash account is debited when the fund is replenished
 d) The account Cash Short or Over, if debit balance, is presented as part of Operating Expenses

8. Dandelion Company had the following account balances (in Phil Peso) at December 31, 2021:
Cash in Bank – 2,250,000
Cash on Hand – 125,000
Cash legally restricted for plant expansion – 1,600,000
Cash in Bank includes P600,000 of compensating balances against short-term borrowing
arrangements. The compensating balances are not legally restricted as to withdrawal by Dandelion. In
the current assets section of Dandelion’s December 31, 2021, statement of financial position, total
cash should be reported at:
a) P1,775,000
b) P2,250,000
c) P2,375,000
d) P3,975,000

9. Bethany Corporation’s checkbook balance at December 31, 2021 was P50,000. In addition,
Bethany held the following items (in Phil Peso) in its safe on that date:
Check payable to Bethany dated December 31, 2021, in payment of a sale made in December 2021,
not included in December 31 checkbook balance – 20,000
Check payable to Bethany deposited on December 15 but returned by bank on December 30 marked
NSF. The deposit and the return were both reflected in the checkbook – 5,000

Check drawn on Bethany’s account, payable to a vendor, dated December 30, but not yet mailed to
payee as of December 31, 2021. The check is not yet recorded. – 3,000

The amount to be shown as Cash in Bethany’s statement of financial position at December 31, 2021
is:
a) P48,000
b) P65,000
c) P68,00068,000
d) P70,000

10. Bataan Company had a checkbook balance on December 31, 2021 of P8,000,000, and held the
following items (in Phil. Peso) in its safe:

Check payable to Bataan dated January 5, 2022, included in December 31 checkbook balance –
2,000,000

Check payable to Bataan, deposited on December 20, and included in December 31 checkbook
balance, but returned by the bank on December 30 stamped NSF. The check was redeposited on
January 2, 2022 and cleared January 3, 2022 – 500,000
Check drawn on Bataan’s account and payable to a supplier dated and recorded December 31 but not
mailed until January 15, 2022 – 1,500,000

What amount should be reported as cash on December 31, 2021?

a) P7,000,000
b) P7,500,000
c) P9,000,000
d) P9,500,000

11. On December 31, 2021, Kanazi Corporation had the following balances in the bank accounts (in Phil.
Peso) it maintains with Philippine Bank:

Checking account No. 101 – 1,750,000

Time deposit account (30 days) – 250,000

90-day Treasury bill due on Feb. 28, 2022 – 500,000

In the December 31, 2021 statement of financial position, what total amount should be reported as cash
and cash equivalent?

a) P1,900,000
b) P2,000,000
c) P2,500,000
d) P3,200,000

12. The petty cash fund of Six Sigma Trading at the end of the fiscal year ended June 30, 2020 is
composed of the following (in Phil. Peso):

Currencies – 3,800
Coins – 1,200
Paid Vouchers – 9,750
Check drawn by the manager, returned by bank marked NSF – 2,750
Check drawn by the company payable to the petty cash custodian, representing her salary – 12,500

The amount of petty cash fund that should be shown on the statement of financial position at June 30,
2020 of Six Sigma Trading is:

a) P5,000
b) P17,500
c) P20,250
d) P30,000

13. On April 1, 2021, Magnanimous Corporation established an imprest petty cash fund for P10,000 by
writing a check drawn against its checking account. On April 30, 2021, the fund contained the following
(in Phil. Peso):

Currency and coins – 3,000

Receipts for office supplies – 4,000
Receipts for postage still unused – 2,000
Receipts for transportation – 600

On April 30, 2021, the entity wrote a check to replenish the fund. What is the amount of replenishment
under the imprest fund system?

a) P10,000
b) P6,600
c) P7,000
d) P3,000

14. In preparing its August 31, 2019 bank reconciliation, Jade Company has the following available
information (in Phil. Peso):

Balance per bank statement, 8/31/2019 – 180,500

Deposit in Transit, 8/31/2019 – 32,500
Return of customer’s NSF check, 8/31/2019 – 6,000
Outstanding Checks, 8/31/2019 – 27,500
Bank service charge for August – 1,000

At August 31, 2019, Jade Company’s correct cash balance is:

a) P185,500
b) P179,500
c) P178,500
d) P175,500

15. In preparing its August 31, 2019 bank reconciliation, Jade Company has the following available
information (in Phil. Peso):
Balance per bank statement, 8/31/2019 – 180,500
Deposit in Transit, 8/31/2019 – 32,500
Return of customer’s NSF check, 8/31/2019 – 6,000
Outstanding Checks, 8/31/2019 – 27,500
Bank service charge for August – 1,000
At August 31, 2019, Jade Company’s unadjusted cash balance per books is:
a) P185,500
b) P190,500
c) P192,500
d) P180,500
16. During the audit of Emphatic Company on December 31, 2021, the following data (in Phil. Peso) are
gathered:
Balance per book – 4,000,000
Bank Charges – 10,000
Outstanding Checks – 950,000
Deposit in Transit – 1,200,000
Customer note collected by bank – 1,500,000
Interest on customer note – 60,000
Depositor’s note charged to account – 1,000,000
Customer check returned NSF – 250,000
What is the adjusted book balance on December 31, 2021?
a) P4,300,000
b) P5,300,000
c) P4,250,000
d) P4,000,000
17. During the audit of Emphatic Company on December 31, 2021, the following data (in Phil. Peso) are
gathered:
Balance per book – 4,000,000
Bank Charges – 10,000
Outstanding Checks – 950,000
Deposit in Transit – 1,200,000
Customer note collected by bank – 1,500,000
Interest on customer note – 60,000
Depositor’s note charged to account – 1,000,000
Customer check returned NSF – 250,000
What is the unadjusted bank balance on December 31, 2021?
a) P5,550,000
b) P5,300,000
c) P4,550,000
d) P4,050,000
18. Laconic Company’s bank statement for the month of April included the following information (in
Phil. Peso):
Bank service charge for April – 15,000
Check deposited by Laconic during April returned by bank and marked NSF – 40,000
Deposits made but not yet recorded by bank – 130,000
Checks written and mailed but not yet recorded by bank – 100,000
Laconic Company found a customer check for P35,000 that had not yet been recorded and had not been
deposited. The general ledger showed a bank account balance of P920,000. What is the adjusted cash in
bank on April 30?
a) P900,000
b) P865,000
c) P930,000
d) P965,000
19. Laconic Company’s bank statement for the month of April included the following information (in
Phil. Peso):
Bank service charge for April – 15,000
Check deposited by Laconic during April returned by bank and marked NSF – 40,000
Deposits made but not yet recorded by bank – 130,000
Checks written and mailed but not yet recorded by bank – 100,000
Laconic Company found a customer check for P35,000 that had not yet been recorded and had not been
deposited. The general ledger showed a bank account balance of P920,000. What is the unadjusted bank
balance on April 30?
a) P900,000
b) P865,000
c) P870,000
d) P965,000
20. Elevated Corporation disclosed the following information as of the end of year 2020:
Investment securities of P1,000,000. These securities are share investments in entities that are traded in
the Philippine Stock Exchange. The shares are actively traded in the stock market
Cash of P3,400,000 deposited in Export and Import Bank
Investment securities of P2,000,000. These securities are government treasury bills that have a 10-year
term. The treasury bills were purchased on December 29, 2020, at which time they had two (2) months
until they mature.
Investment securities of P1,500,000. These securities are commercial papers that have a 9-month term.
The commercial papers were purchased on December 29, 2020, at which time they had three (3) months
until maturity.
What amount should Elevated report as “Cash and Cash Equivalents” at the end of the year?
a) P7,900,000
b) P5,400,000
c) P6,400,000
d) P6,900,000
21. In preparing the bank reconciliation on December 31, 2020, Casket Inc., provided the following:
Balance per bank statement – P3,800,000
Deposit in transit – P520,000
Amount erroneously credited by bank to Casket’s account – P40,000
Bank service charge for the month – P5,000
Outstanding checks – P675,000
What is the adjusted cash in bank on December 31, 2020?
a) P3,600,000
b) P3,605,000
c) P3,645,000
d) P3,685,000

QUIZ
1. To be reported as “Cash and Cash Equivalent”, the cash item must be:
a) unrestricted in use for current operations
b) available for the purchase of property, plant, and equipment
c) set aside for the liquidation of long-term debt
d) deposited in bank
2. The amount reported as “Cash” in a company’s statement of financial position normally should
exclude:
a) petty cash fund
b) postdated checks issued by the company
c) postdated checks payable to the company
d) checks undelivered to payee
3. In most situations, the petty cash fund is reimbursed just prior to the year end and an adjusting entry is
made to avoid
a) overstatement of cash and understatement of expenses
b) understatement of cash and overstatement of expenses
c) understatement of cash and appropriate statement of expenses
d) misstatement of revenues
4. The Petty Cash Fund account under the imprest fund system is debited
a) only when the fund is created
b) when the fund is created and every time it is replenished
c) when the fund is created and when the size of the fund is increased
d) when the fund is created and when the size of the fund is decreased
5. The journal entries for bank reconciliation
a) are taken from the balance per bank section only
b) may include a debit to Office Expense for bank service charges
c) may include a credit to Accounts Receivable for an NSF check
 d) may include a debit to Accounts Payable for an NSF check
6. Parasite Company had the following account balances on December 31, 2021
Cash in Bank Current Account – 5,000,000
Cash in Bank Payroll Account – 1,000,000
Cash in Bank restricted for building construction – 3,000,000
Time Deposit placed on December 15, 2021 due on January 14, 2022 – 2,000,000
Cash on Hand – 500,000
What amount should be reported as “Cash and Cash Equivalent” on December 31, 2021?
a) P6,300,000
b) P8,300,000
c) P6,500,000
d) P8,500,000
7. 7. Parasite Company had the following account balances on December 31, 2021
Cash in Bank Current Account – 5,000,000
Cash in Bank Payroll Account – 1,000,000
Cash in Bank restricted for building construction – 3,000,000
Time Deposit placed on December 15, 2021 due on January 14, 2022 – 2,000,000
Cash on Hand – 500,000
The Cash in Bank Current Account has a legally restricted compensating balance
of P1,000,000, while the Cash on Hand includes a post-dated check in the amount
of P200,000.
What amount should be reported as “Cash” on December 31, 2021?
a) P5,300,000
b) P9,500,000
c) P6,500,000
d) P8,500,000
8. Valor Corporation’s December 31, 2021 checkbook balance was P5,000,000. On that date, Valor held
the following items in its safe:
Check dated January 02, 2022 payable to Valor in payment of a sale made in December 2021, not
included in the December 2021 checkbook balance – P2,000,000
Check payable to Valor that was deposited on December 15 and included in the December 2021
checkbook balance, but was returned by the bank on December 29 marked “NSF”. The check was
redeposited on January 02, 2022, and was cleared on January 09, 2022 – P500,000
Check drawn against Valor’s account payable to a vendor, dated and recorded in Valor’s books on
December 31, 2021 but not mailed until January 10, 2022 – P300,000
What amount of “Cash” should be reported on December 31, 2021?
a) P6,800,000
b) P6,500,000
c) P5,300,000
d) P4,800,000
9. The petty cash fund was established in the amount of P5,000, and contains P4,000 in cash and P950 in
vouchers for disbursements when it was replenished.
The journal entry to record replenishment should include credit(s) to the following account(s):
a) Cash in Bank, P1,000
b) Petty Cash, P1,000
c) Cash in bank, P950; Cash Short or Over, P50
d) Petty Cash, P750
10. The Petty Cash Fund (PCF) account of Snappy Company showed its composition as follows:
Coins and currency – P3,300
Total Paid Vouchers (unreplenished to date) – P3,000
Check returned by bank stamped as “NSF” – P1,000
Check drawn by Snappy to the order of the PCF Custodian as replenishment check – P2,700
What is the balance of the PCF?
a) P10,000
b) P9,000
c) P7,000
d) P6,000
11. In preparing the March 31, 2021 bank reconciliation, Infinity Corporation provided the following
information:
Balance per bank statement – P1,805,000
Deposit in Transit – P325,000
Customer’s check returned by bank marked “NSF” – P60,000
Bank service charge for the month – P10,000
Outstanding checks – P275,000
What is the adjusted cash in bank on March 31, 2021?
a) P1,755,000
b) P1,785,000
c) P1,855,000
 d) P1,925,000
12. Use the information in No. 11. What is the unadjusted book balance on March 31, 2021?
a) P1,755,000
b) P1,785,000
c) P1,855,000
d) P1,925,000
13. Use the information in No. 11. The journal entry for the reconciling items per books is
a) DR Bank Charges P10,000; DR Accounts Receivable P60,000; CR Cash in Bank P70,000
b) DR Accounts Payable P70,000; CR Cash in Bank P70,000
c) DR Interest Expense P10,000; DR Cash in Bank P60,000; CR Accounts Payable P70,000
d) DR Cash in Bank P70,000; CR Accounts Receivable P70,000
14. Use the information in No. 11. The journal entry for the Outstanding Checks is
a) DR Accounts Payable P275,000; CR Cash in Bank P275,000
b) DR Cash in Bank P275,000; CR Accounts Receivable P275,000
c) Either a or b
d) Neither a nor b
15. Constance, Inc. provided the following data for the purpose of reconciling the cash balance per book
with the balance per bank statement on December 31, 2021
Balance per bank statement – P2,000,000
Outstanding check – P400,000
Deposit in transit – P200,000
December NSF checks, P50,000 of which had been redeposited and cleared by December 27, 2021 –
P150,000
Erroneous credit to Constance’s account representing loan proceeds granted to another company –
P300,000
Proceeds of note collected by the bank for Constance, net of P20,000 service charge – P750,000
What is the cash in bank to be reported in the December 31, 2021 statement of financial position?
a) P1,400,000
b) P1,450,000
c) P1,500,000
d) P1,800,000
16. Use the data in No. 15. What is the unadjusted book balance of Constance on December 31, 2021?
a) P850,000
b) P970,000
c) P1,250,000
d) P2,000,000
17. One Company had the following information for March 31, 2021:
Balance per bank – P4,650,000
Deposit in transit – P 1,000,000
Outstanding checks – P1,250,000
Balance per book – P4,400,000
Data per bank statement for the month of April are as follows:
Deposits – P6,000,000
Disbursements – P5,000,000
All reconciling items on March cleared to the bank in April. What is the amount of bank credits that
pertains to April?
a) P5,000,000
b) P5,650,000
c) P6,000,000
d) P7,000,000
18. Use the information in No. 17. What is the amount charged by the bank against the depositor’s
account pertaining to April?
a) P1,250,000
b) P3,750,000
c) P5,000,000
d) P6,250,000
19. Willow Corporation keeps all its cash in a checking account. An examination of the entity’s
accounting records and bank statement for the month ended June 30, 2021 revealed the following
information:
Ø The cash balance per book on June 30 is P8,500,000.
Ø A deposit of P1,000,000 that was placed in the bank’s night depository on June 30 does not appear in
the bank statement.
Ø The bank statement shows that on June 30 the bank collected a note for the depositor and credited the
proceeds of P950,000.
Ø Checks outstanding on June 30 amount to P300,000.
Ø Willow discovered that a check drawn in June in payment of an account payable in the amount of
P200,000 had been recorded in the books as P20,000.
Ø Included with the June bank statement was NSF check for P250,000 that Willow had received from a
customer on June 26.
Ø The bank statement shows a P20,000 service charge for June.
What is the cash in bank to be reported in the statement of financial position on June 30, 2021?
a) P8,300,000
b) P9,000,000
c) P9,180,000
d) P9,360,000
20. Use the information in No. 19. What is the adjusted balance per bank on June 30, 2021?
a) P8,300,000
b) P9,000,000
c) P9,180,000
d) P9,360,000