02.01 Flashcards
What does the balance sheet report?
The effect of transactions at a point in time
How are the items on the balance sheet broken down?
Into current and non-current
What are current assets?
Assets that will be used up or converted into cash within one year or the operating cycle, whichever is longer
What are current liabilities?
Liabilities that will be settled within one year or the operating cycle, whichever is longer
What’s up with Ca$h?
Most liquid asset and usually first presented under current assets
What is a cash equivalent?
Security that is easily converted into cash with an original maturity of 90 days or less
Examples of Cash and Cash Equivalents?
Petty cash, unmailed checks, bank checks, travelers checks
Are compensating balances and postdated checks or NSF checks considered cash?
NO!
How you do you account for overdraft?
- If from the same bank you can net them Pos=cash neg=current liability
- Different banks pos=asset neg=current liability
How do you account for current restricted cash?
- If current segregate it from cash
- If non current put in other assets or investments
How do you find the balance on a bank statement?
\+deposits in transit -outstanding checks \+-errors by bank \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Correct Balance
How do you find the checkbook balance?
\+amounts collected by bank -unrecorded bank charges \+-errors made in recording \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ correct balance
