ATENEO DE NAGA UNIVERSITY
College of Business and Accountancy
2nd Semester – S/Y 2022-2023
Intermediate Accounting 1
Preliminary Examination [Link], CPA
Name: Date: Section: Score:
INSTRUCTIONS: 1. Read carefully the questions.
2. Choose the best option and shade the letter of your choice in the answer sheet provided.
3. Erasures are not allowed and considered wrong.
1. Which of the following is part of unrestricted cash?
a. Time deposit with a maturity of one month from the date of purchase
b. Foreign currency denominated cash in bank
c. Cash in bank in a closed bank
d. Cash set aside for acquisition of a machinery within twelve months after the reporting period
2. Which of the following is properly excluded in the line item cash and cash equivalents?
a. Undeposited collections that has yet to be reflected in the bank account
b. Collections made by the bank on behalf of the company
c. Postdated check issued to a supplier for purchase of merchandise inventory
d. Check payable to the company but marked as no sufficient fund by the bank
3. When bank receives cash from a depositor, the cash should be credited to
a. Cash
b. Cash in bank
c. Accounts payable
d. Deposit liability
4. Statement 1: The company sets aside a portion of the cash to settle a long-term liability which is due within twelve
months after the reporting period. The accountant records the cash as part of the noncurrent assets.
Statement 2: The company plans to set up a cash fund for acquisition of a truck. The truck is expected to be purchased
on March 31, three months after the close of the calendar year. The accountant records the cash as part of the current
assets.
a. Only statement 1 is true.
b. Only statement 2 is true
c. Both statements 1 and 2 are true.
d. Neither statements 1 and 2 are true.
For items 5 and 6:
The information below was taken from the bank transfer schedule prepared during the audit of Fox Co.’s financial statements
for the year ended December 31, 2021. The company maintains one saving account in One National Bank. The following are the
schedule of checks issued and received during December. Assume that the check release date is also the receipt date.
Bank Accounts Date Reflected
Check No. Date of Check Release Date
From To in Bank
101 One National Bank One True Bank Jan. 5, 2022 Dec. 28, 2021 Jan. 5, 2022
202 One Home Bank One National Bank Dec. 25, 2021 Dec. 26, 2021 Jan. 1, 2022
303 One National Bank One Local Bank Dec. 29, 2021 Jan. 3, 2022 Jan. 4, 2022
404 One National Bank One Made Bank Dec. 28, 2021 Dec. 29, 2021 Jan. 2, 2022
505 One Call Bank One National Bank Jan. 2, 2022 Dec. 30, 2021 Jan. 3, 2022
5. Which check/s should be part of cash in bank of the company as of December 31, 2021?
a. 101, 202 and 104
b. 101, 303 and 505
c. 101, 404, and 505
d. 101, 202, and 303
6. Which check/s should be not form part of cash in bank of the company as of December 31, 2021?
a. 101 and 103
b. 404 and 505
c. 303 and 404
d. 202 and 505
7. The principal purpose of a voucher system is to provide assurance that
a. All cash receipts are deposited intact in the bank
b. All cash disbursements are approved before a check is issued
c. All cash receipts are recorded in the accounting records
d. All purchase invoices are supported by debit memoranda
8. The chief accountant allowed the recording and adjustments of certain receipts and disbursements after the reporting
period. After the adjustments made, the financial position and financial performance of the company was made to
agree with the planned expectations at the beginning of the year. This is called
a. Lapping
b. Window dressing
c. Kiting
d. Fraud
9. In most situations, the petty cash fund is reimbursed just prior to the year end and an adjusting entry is made to avoid
a. The overstatement of cash and understatement of expenses
b. The understatement of cash and the overstatement of expenses
c. The misstatement of revenues
d. The understatement of cash with the appropriate statement of expenses
10. In replenishing a petty cash fund under fluctuating fund system, which of the following entries is required?
a. Debit Petty Cash, Credit Cash in Bank
b. Debit Cash in Bank, Credit Petty Cash Fund
c. Debit Expenses, Credit Cash in Bank
d. Debit Petty Cash, Credit Expenses
11. During the cash count conducted, the actual count exceeds the petty cash balance per books. Which of the following
forms part of the entry to adjust the excess cash?
a. Debit cash
b. Debit cash short or over
c. Credit cash
d. Credit miscellaneous expense
12. Unless otherwise stated, reconciling items are presumed to have been taken up in the books or taken up by the bank
a. During the month the bank statement is prepared
b. In the immediately following month
c. In the immediately preceding month
d. In the immediately following or preceding reporting period, on a case-to-case basis
13. Which of the following is deducted from the cash balance per bank when computing for the cash balance per books?
a. Deposit in transit
b. Debit memo
c. Credit memo
d. Erroneous book credit
14. If the balance shown on a company’s bank statement is less than the correct cash balance, and neither the company
nor the bank has made any errors, there must be
a. Deposits credited by the bank but not yet recorded by the company
b. Outstanding checks
c. Bank charges recorded by the company
d. Deposits in transit
15. When preparing a proof of cash, the correction for an overstatement of cash in the previous month
a. Is an addition to the previous month’s balance per books and a deduction to receipts in current month
b. Is a deduction to previous month’s cash balance and a deduction to current month’s disbursements
c. Is an addition to previous month’s balance per bank statement and a deduction to receipts in the current month
d. Is an addition to previous month’s balance per bank statement and a deduction to current month’s
disbursements
16. Errors are usually
a. Adjusted by the company
b. Adjusted by the bank
c. Corrected by the party who commits the error
d. Not corrected
17. Bank reconciliation is usually prepared
a. On a daily basis
b. On a weekly basis
c. On a monthly basis
d. On a quarterly basis
For items 18 to 20:
The following items compose the cash and cash equivalents account of AC16 Company as of December 31, 2022:
Undeposited collections P114,500
Petty cash fund (including currency and coins, P2,540 and unreplenished petty 10,000
cash vouchers, P7,350)
Cash in bank – First Bank (50,000)
Cash in bank – One National Bank 2,020,000
Cash in bank – One Home Account 200,000
Cash in bank – One True Account 1,500,000
Time deposit 450,000
Additional information:
1. Undeposited collections include a postdated check from AC12 Company amounting to P4,500, but excludes check
payable to AC11 Company delivered on January 3, 2023 amounting to P12,000. The company made entries for the
receipts and disbursements in December.
2. Cash in bank – One National Bank excludes an unrestricted compensating balance amounting to P180,000.
3. Cash in bank – One Home Account is for the payroll of the employees.
4. Cash in bank – One True Account is restricted for settlement of a loan in 2024.
5. Time deposit has an original term of eight months from July 1, 2022. It was acquired by the company on
October 31, 2022.
18. Which of the following is part of the correct adjusting entry for the petty cash fund?
a. Debit currency and coins, P2,540
b. Debit petty cash fund, P7,460
c. Debit cash short or over, P110
d. Debit expenses, P7,460
19. How much is the correct cash and cash equivalents as of December 31, 2022?
a. P2,974,540
b. P2,524,540
c. P2,524,650
d. P2,474,540
20. Which of the following is incorrect?
a. The unrestricted compensating balance should form part of the cash balance.
b. The check payable to the company should be included in the cash balance.
c. The payroll account should be part of the cash balance.
d. The petty cash fund balance should be equal to currency and coins.
For items 21 and 22:
AC16 Company adopts the imprest fund system in its cash control. The company deposits receipts in its bank account and makes
disbursements by means of check. The bank statement for the month of December shows the following:
Debit Credit
Date Balance
Check No. Amount OR No. Amount
Dec.1 1,205,000
Dec.2 101 11,000 1,194,000
Dec.4 10 25,000 1,219,000
Dec.5 102 8,900 11 28,000 1,238,100
Dec.7 103 4,200 12 19,000 1,252,900
Dec.10 200 1,252,700
Dec.12 106 5,600 1,247,100
Dec.14 14 32,000 1,279,100
Dec.17 108 2,400 350 1,277,050
Dec.20 17 21,000 1,298,050
Dec.27 8,000 1,306,050
Dec.31 150 1,305,900
The cash receipts journal and cash disbursements journal show the following:
Cash Disbursements Journal Cash Receipts Journal
Check No. Check Date Release Date Amount OR No. Receipt Date Amount
101 Nov. 30 Nov. 30 P11,000 10 Dec. 4 P25,000
102 Dec. 4 Dec. 5 8,900 11 Dec. 5 28,000
103 Dec. 6 Dec. 7 4,200 12 Dec. 6 19,000
104 Dec. 8 Dec. 9 5,000 13 Dec. 12 31,000
105 Jan. 4 (next yr) Dec. 11 6,800 14 Dec. 13 32,000
106 Dec. 10 Dec. 12 5,600 15 Dec. 17 40,000
107 Dec. 15 Jan. 2 (next yr) 3,100 16 Dec. 19 34,000
108 Dec. 16 Dec. 17 2,400 17 Dec. 20 21,000
Bank service charge amounted P200 and P150 in December 10 and December 31, respectively. Also, interest income amounted
to P350 in December 17 while note collected on behalf of the company amounted to P8,000 in December 27.
21. How much is the deposit in transit as of December 31?
a. P105,000
b. P113,000
c. P113,350
d. P74,000
22. How much is the outstanding checks as of December 31?
a. P11,800
b. P8,100
c. P14,900
d. P5,000
For items 23 to 25:
The following pertains to the cash in bank balance per bank and per books of AC16 Company:
Balances per company’s ledger
November 30 P125,000
December 31 ?
Total debits to cash per company’s books during December 42,000
Total credits to cash per company’s books during December 27,000
Bank balances
November 30 119,300
December 31 143,880
December receipts recorded by bank during December ?
December disbursements recorded by bank during December 33,020
Deposits in transit
November 30 32,000
December 31 26,000
Outstanding checks
November 30 14,300
December 31 ?
Bank service charge
November 30 500
December 31 420
Note collected on behalf of the company
November 30 12,500
December 31 ?
NSF check during December redeposited immediately. No entry was made to take 4,100
up the return and redeposit.
23. How much is the unadjusted bank receipts in December?
a. P49,400
b. P47,500
c. P51,600
d. P57,600
24. How much is the note collected on behalf of the company in December?
a. P18,000
b. P12,500
c. P16,000
d. P17,500
25. How much is the outstanding checks in December?
a. P14,300
b. P12,300
c. P15,300
d. P13,300