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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
Classify: Compensating balance - restricted for more than 12 months
Long term investment
25
Classify: Escrow deposit
Restricted
26
What is the treatment for bank overdrafts?
General rule: Current liability Exception: Part of cash if used as offsetting
26
Classify: Time deposit
Cash equivalents
27
Classify: PCF
Cash
28
Cash funds used in the operations of the business are _________
cash
28
Classify: Revolving fund
Cash
29
When can you offset bank overdrafts?
1. Entity has two bank accounts in the same bank where one has positive balance. 2. Immaterial 3. Integral to cash management
30
Classify: Revolving fund
Cash
31
Classify: Change fund
Cash
32
Classify: Travel fund
Cash
33
Cash funds used for acquisition of current assets
Cash
34
Cash funds used for acquisition of non-current assets
Long-term investment
35
Cash funds used for settlement of current liabilities
Cash
36
Cash funds used for settlement of non-current liabilities
Long-term investment
37
Classify: Dividend fund
Cash
38
Classify: Payroll fund
Cash
39
Classify: Interest fund
Cash
40
Classify: VAT fund
Cash
41
Classify: Mortgage fund
Long-term investment
42
Classify: Pension fund
Long-term investment
43
Classify: Insurance fund
Long-term investment
44
Classify: Contingency fund
Long-term investment
45
Differentiate systems used in accounting for PCF
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
Money set aside to defray relatively small amount of cash disbursements.
PCF
47
Consists of misappropriating a collection from one customer and concealing this defalcation when collection is made from another customer
Lapping
48
When is lapping most common?
One employee is involved in all cash handling and recording tasks.
49
When is kiting usually done?
end of month
49
Transfer of cash from one bank to another bank to take advantage of the float time in reflecting withdrawals
Kiting
49
What are examples of controls to prevent or detect lapping?
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
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.
Window Dressing
51
When does cash shortage or overage occur?
accountability does not equal accounted for accountability > accounted for - shortage accountability < accounted for - overage
52
Temporary account while investigation is ongoing as to why overage or shortage exists.
Cash over and short
53
What standard covers cash equivalents?
PAS 7
53
Only _______ instruments can qualify as cash equivalents.
debt
53
Why can't equity instruments be cash equivalents?
They do not have maturity date.
54
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.
Cash equivalents
55
Cash equivalents should have maturity within _______________.
3 months
56
Classify: Money market instrument
Cash equivalents
56
Classify: Redeemable P/S with mandatory redemption
Cash equivalents
57
Classify: Commercial paper
Cash equivalents
58
Statement which brings into agreement the cash balance per book and cash balance per bank.
Bank Reconciliation
58
Classify: Treasury bills
Cash equivalents
59
How often is the bank reconciliation prepared?
Monthly
60
Main cause of differences between bank and book balance.
Timing differences Errors
61
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.
Bank statement
62
Forms of bank reconciliation
Adjusted balance method Book to bank method Bank to book method
63
Can certified checks be part of outstanding checks?
No

FAR/AP (7 decks)

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