Finaco
FAR EASTERN UNIVERSITY 1ST Preliminary Examination Fin ACT 1 Financial Acctg.
Part I – Multiple Choice Theory 30%
1.To be reported as “cash and cash equivalent”, the cash item must be, (a) Unrestricted in use for current operation; (b) Available for the purchase of property, plant and equipment; (c) Set aside for the liquidation of long-term debt; (d). Deposited in the bank. Answer: (a)
2. Which of the following shall not be considered cash for financial reporting purposes? (a) Petty cash fund and change fund; (b) Money orders, certified checks and personal checks; (c) Coins currency and available funds; (d) Postdated checks and IOU’s. Answer: (d)
3. If material, deposits in foreign bank which are subject to foreign exchange restriction shall be classified: (a) Separately as current assets, with appropriate disclosure; (b) Separately as non-current asset with appropriate disclosure; (c) Be written off as an extraordinary loss; (d) as part of cash and cash equivalents. Answer: (b)
4. Bank Overdraft (a) Is a debit balance in a cash in bank account; (b) Is offset against demand deposit account in another bank; (c) Which cannot be offset is classified as current liability; (d) Which cannot be offset is classified as noncurrent liability. Answer: (c)
5. A compensating balance (a) Must be included in cash and cash equivalents; (b) Which is legally restriced and related to long-term loan is classified as current asset; (c) Which is legally restricted and related to short-term loan is classified separately as current asset; (d) Which is not legally restricted as to withdrawal is classified separately as current asset. Answer: (c)
6. The internal control feature that is specific to petty cash is (a) Separation of duties; (b) Assignment of responsibility; (c) Proper authorization; (d) Imprest system. Answer: (d)
7. What happens when a petty cash is in use? (a) Most small amounts are paid from cash receipts before they are
Part I – Multiple Choice Theory 30%
1.To be reported as “cash and cash equivalent”, the cash item must be, (a) Unrestricted in use for current operation; (b) Available for the purchase of property, plant and equipment; (c) Set aside for the liquidation of long-term debt; (d). Deposited in the bank. Answer: (a)
2. Which of the following shall not be considered cash for financial reporting purposes? (a) Petty cash fund and change fund; (b) Money orders, certified checks and personal checks; (c) Coins currency and available funds; (d) Postdated checks and IOU’s. Answer: (d)
3. If material, deposits in foreign bank which are subject to foreign exchange restriction shall be classified: (a) Separately as current assets, with appropriate disclosure; (b) Separately as non-current asset with appropriate disclosure; (c) Be written off as an extraordinary loss; (d) as part of cash and cash equivalents. Answer: (b)
4. Bank Overdraft (a) Is a debit balance in a cash in bank account; (b) Is offset against demand deposit account in another bank; (c) Which cannot be offset is classified as current liability; (d) Which cannot be offset is classified as noncurrent liability. Answer: (c)
5. A compensating balance (a) Must be included in cash and cash equivalents; (b) Which is legally restriced and related to long-term loan is classified as current asset; (c) Which is legally restricted and related to short-term loan is classified separately as current asset; (d) Which is not legally restricted as to withdrawal is classified separately as current asset. Answer: (c)
6. The internal control feature that is specific to petty cash is (a) Separation of duties; (b) Assignment of responsibility; (c) Proper authorization; (d) Imprest system. Answer: (d)
7. What happens when a petty cash is in use? (a) Most small amounts are paid from cash receipts before they are