Cash and Cash Equivalent Flashcards
Money in the form of currency and coins.
Cash
Negotiable Instruments in the form of checks and money orders acceptable by the bank for immediate credit.
C A S H
Bank deposits, whether in a savings or current account.
C A S H
(PAS 7)
- Short-term and highly liquid investments
- Readily convertible to cash
- Near maturity that there is insignificant risk that the values will change.
CASH EQUIVALENTS
Statement that settles the difference between the bank statement and cash balance per book.
BANK RECONCILIATION
Book Reconciling items are…
- Credit Memos
- Debit Memos
- Errors that need to be adjusted by depositor
Bank Reconcilling items are…
- Deposits in Transit (DIT)
- Outstanding Checks
- Errors to be corrected by Bank
Money set aside to pay small and recurring expenses where it’ll be inefficient to settle such payments by issuing checks.
Petty Cash Fund
Petty Cash fund may be accounted for using…
Imprest Fund System
and
Fluctuating Fund System
A control system where all cash receipts, including checks, to be deposited intact and all cash disbursements be made by the issuance of a check.
Imprest Control System
As a RULE, an overdraft shall be classified as a current liability and not offset against current accounts with a positive or debit balance.
As an EXCEPTION, if the overdraft is in a bank where there are other accounts that have a positive balance and those accounts are sufficient to cover the overdraft, the total cash shall be shown NET OF THE OVERDRAFT.
Legally Restricted Balance
(Short Term)
Current Asset
*but not cash
Legally Restricted Balance
(Long Term)
Non-Current Assets
- Investments
Unrestricted Balance / Informal Agreement to Restriction
C A S H
PAS 7
-Short-Term
(debt instrument w/ low risk & yield)
-Highly Liquid
-Near Maturity
(acquired 3 months or less from maturity)
CASH EQUIVALENTS
