FAR Cash and Cash Equivalents

Bank overdrafts are always included as part of cash in the statement of financial position.

False

Cash equivalents are investments with original maturities of six months or less.

False

Certificates of deposit are usually classified as cash on the statement of financial position.

False

MD had the ff. account balance at Dec. 31, 2010:Cash on hand and in bank P 975, 000Cash legally restricted for additions to plant(Expected to be disbursed in 2012) 600, 000Bank Certificate of Deposit (due Feb. 1, 2011) 250, 000 In the amount assets section of MD's Dec. 31, 2010 balance sheet, what total amount of cash should be reported under the caption "cash and cash equivalent" ?

1,225,000

The cash account in the current assets section of the statement of financial position if Tawiran Company consists of: Bank sinking fund 1,500,000 Checking account in FEBTC (A P320,000 check isstill outstanding per bank statement) 3,115,000 Currency and coins awaiting deposit 1,135,000 Deposit in a bank closed by BSP 500,000 Petty cash fund (of which P10,000 in is the form ofpaid vouchers) 50,000 Receivables from officers and employees 175,000 6,515,000 The correct cash balance should be

4,330,000

The General Ledger of Whitehouse Company's showed a balance of P1,600,070 in its "cash" account on December 31,2009. The following items are included: Bank Draft P80,070 Outstanding Checks P10,000 Cash on Hand P90,000 Cash in Sinking Fund P600,000 Postage Stamps P400 Travel Advances P80,100 Customer's Checks dated Jan. 2010 P5,000 IOU P3,000 Petty Cash Fund (including the receipt for P3000) P7,000 What is the correct amount of cash?

898,570

What is a compensating balance?

Minimum deposits required to be maintained in connection with a borrowing arrangement.

Which of the following is considered cash?

Money orders

Consider the following: Cash in Bank - checking account of P13,500, Cash on hand of P500, Post-dated checks received totaling P3,500, and Certificates of deposit totaling P124,000. How much should be reported as cash in the statement of financial position?

P 14,000.

The following "cash items" are extracted from the book of Palay Marketing: Coins and Currencies P 13,250.00 Savings Deposits 25,000.00 Current account 37,750.00 Traveler's Check 10,000.00 Postdated Check 5,000.00 Advances from customer 8,000.00 Palay Marketing should report cash accounting to

P 86, 000

Kennison Company has cash in bank of P10,000, restricted cash in a separate account of P3,000, and a bank overdraft in an account at another bank of P1,000. Kennison should report cash of

P10,000.

Lawrence Company has cash in bank of P15,000, restricted cash in a separate account of P4,000, and a bank overdraft in an account at another bank of P2,000. Lawrence should report cash of

P15,000.

Kaniper Company has the following items at year-end: Cash in bank P20,000 Petty cash 300 Commercial paper with maturity of 2 months 5,500 Postdated checks 1,400 Kaniper should report cash and cash equivalents of

P25,800.

Which of the following is not considered cash for financial reporting purposes? Coin, currency, and available funds Money orders, certified checks, and personal checks Postdated checks and I.O.U.'s Petty cash funds and change funds

Postdated checks and I.O.U.'s

In which account are post-dated checks received classified? Payables. Cash. Prepaid expenses. Receivables.

Receivables

Which of the following is not true? All of these are not true. The imprest petty cash system in effect adheres to the rule of disbursement by check. 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. The Petty Cash account is debited when the fund is replenished.

The Petty Cash account is debited when the fund is replenished.

Money orders are considered cash.

True

Short-term, highly liquid investments may be included with cash on the statement of financial position.

True

Which of the following statement is incorrect when a company chooses the fair value option for its receivables?

Unrealized holding gains and losses from fair value adjustments are reported as a component of comprehensive income.

To be reported as "cash and cash equivalent, the cash items must be

Unrestricted in use for current operations

A minimum cash balance required by a bank is called

compensating balance

A P150 petty cash fund has cash of P28 and receipts of P110. The journal entry to replenish the account would include a

debit to Cash Over and Short for P12.

A cash equivalent is a short-term, highly liquid investment that is readily convertible into known amounts of cash and

is so near its maturity that it presents insignificant risk of changes in interest rates.

deposits held as compensating balances a. usually do not earn interest b. if legally restricted and held against short-term credit may be included as cash c. if legally restricted and held against long-term credit may be included among current assets d. none of these

none of these

Which of the following should not be considered cash by an accountant?

postage stamps