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FAR/AP > 07 Cash and Cash Equivalents > Flashcards

07 Cash and Cash Equivalents Flashcards

1
Q

Includes money and any other negotiable instrument that is payable in money and acceptable by the bank for deposit and immediate credit.

A

Cash

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2
Q

What standards cover cash and cash equivalents?

A

PFRS 9 Financial Instruments
PAS 1 Presentation of Financial Statements

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3
Q

For an item to be part of cash it must be __________ in use.

A

Unrestricted

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4
Q

Cash is measured at __________.

A

Face value

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5
Q

How do you measure cash in foreign currency?

A

Face value translated to PHPIf

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6
Q

If cash item is in a closed bank or banks undergoing bankruptcy, cash is measured at _____________.

A

Estimated realizable value or recoverable value

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7
Q

3 groups of cash

A

Cash on hand
Cash in bank
Cash fund

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8
Q

Classify:
Coins and currencies

A

Cash on hand

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9
Q

Classify:
Normal customer checks

A

Cash on hand

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10
Q

Classify:
Cashier’s checks

A

Cash on hand

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11
Q

Classify:
Manager’s checks

A

Cash on hand

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12
Q

Classify:
Traveler’s checks

A

Cash on hand

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13
Q

Classify:
Money order

A

Cash on hand

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14
Q

Classify:
Bank drafts

A

Cash on hand

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15
Q

Classify:
Drawn post-dated checks

A

Cash on hand

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16
Q

Classify:
Drawn undelivered checks

A

Cash on hand

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17
Q

Classify:
Drawn NSF checks

A

Cash on hand

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18
Q

Classify:
Drawn stale checks

A

Cash on hand

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19
Q

Classify:
Demand deposit

A

Cash in bank

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20
Q

Classify:
Current account

A

Cash in bank

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21
Q

Classify:
Checking account

A

Cash in bank

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22
Q

Classify:
Savings deposit

A

Cash in bank

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23
Q

Classify:
Compensating balance - unrestricted

A

Cash in bank

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24
Q

Classify:
Compensating balance - restricted for less than 12 months

A

Short term investment

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25
Q

Classify:
Compensating balance - restricted for more than 12 months

A

Long term investment

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25
Q

Classify:
Escrow deposit

A

Restricted

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26
Q

What is the treatment for bank overdrafts?

A

General rule: Current liability
Exception: Part of cash if used as offsetting

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26
Q

Classify:
Time deposit

A

Cash equivalents

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27
Q

Classify:
PCF

A

Cash

28
Q

Cash funds used in the operations of the business are _________

A

cash

28
Q

Classify:
Revolving fund

A

Cash

29
Q

When can you offset bank overdrafts?

A
  1. Entity has two bank accounts in the same bank where one has positive balance.
  2. Immaterial
  3. Integral to cash management
30
Q

Classify:
Revolving fund

A

Cash

31
Q

Classify:
Change fund

A

Cash

32
Q

Classify:
Travel fund

A

Cash

33
Q

Cash funds used for acquisition of current assets

A

Cash

34
Q

Cash funds used for acquisition of non-current assets

A

Long-term investment

35
Q

Cash funds used for settlement of current liabilities

A

Cash

36
Q

Cash funds used for settlement of non-current liabilities

A

Long-term investment

37
Q

Classify:
Dividend fund

A

Cash

38
Q

Classify:
Payroll fund

A

Cash

39
Q

Classify:
Interest fund

A

Cash

40
Q

Classify:
VAT fund

A

Cash

41
Q

Classify:
Mortgage fund

A

Long-term investment

42
Q

Classify:
Pension fund

A

Long-term investment

43
Q

Classify:
Insurance fund

A

Long-term investment

44
Q

Classify:
Contingency fund

A

Long-term investment

45
Q

Differentiate systems used in accounting for PCF

A

Imprest Fund System - PCF account does not move in payment of expense and replenishment
Fluctuating Fund System - PCF account moves upon payment of expense and replenishment

46
Q

Money set aside to defray relatively small amount of cash disbursements.

A

PCF

47
Q

Consists of misappropriating a collection from one customer and concealing this defalcation when collection is made from another customer

A

Lapping

48
Q

When is lapping most common?

A

One employee is involved in all cash handling and recording tasks.

49
Q

When is kiting usually done?

A

end of month

49
Q

Transfer of cash from one bank to another bank to take advantage of the float time in reflecting withdrawals

A

Kiting

49
Q

What are examples of controls to prevent or detect lapping?

A

Have someone other than the cashier send statements to customers.

Tightly control use of credit memos.

Stamp all checks with “For Deposit Only”

Have customers pay directly to a lock box

50
Q

Practice of opening the books of accounts beyond the close of the accounting period for the purpose of showing a better financial position and performance.

A

Window Dressing

51
Q

When does cash shortage or overage occur?

A

accountability does not equal accounted for
accountability > accounted for - shortage
accountability < accounted for - overage

52
Q

Temporary account while investigation is ongoing as to why overage or shortage exists.

A

Cash over and short

53
Q

What standard covers cash equivalents?

A

PAS 7

53
Q

Only _______ instruments can qualify as cash equivalents.

A

debt

53
Q

Why can’t equity instruments be cash equivalents?

A

They do not have maturity date.

54
Q

Short-term and highly liquid investments readily convertible into cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates.

A

Cash equivalents

55
Q

Cash equivalents should have maturity within _______________.

A

3 months

56
Q

Classify:
Money market instrument

A

Cash equivalents

56
Q

Classify:
Redeemable P/S with mandatory redemption

A

Cash equivalents

57
Q

Classify:
Commercial paper

A

Cash equivalents

58
Q

Statement which brings into agreement the cash balance per book and cash balance per bank.

A

Bank Reconciliation

58
Q

Classify:
Treasury bills

A

Cash equivalents

59
Q

How often is the bank reconciliation prepared?

A

Monthly

60
Q

Main cause of differences between bank and book balance.

A

Timing differences
Errors

61
Q

Monthly report of the bank to depositor showing cash balance per bank at the beginning, deposits acknowledged, checks paid and other charges and credits and the daily cash balance per bank during the month.

A

Bank statement

62
Q

Forms of bank reconciliation

A

Adjusted balance method
Book to bank method
Bank to book method

63
Q

Can certified checks be part of outstanding checks?

A

No

FAR/AP (7 decks)

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