CASH AND CASH EQUIVALENTS

Question 1

Definition

Cash includes money and other instrument that is payable in money and acceptable by the bank for deposit and IMMEDIATE credit.

Does it needs to be a legal tender to be considered as Cash?

Answer 1

No, even if it’s not in legal tender. It can be classified as cash

Question 2

Recognition

There is no specific standard for cash, but PAS 1 provides “ an entity shall clasify asset as —— when it is cash or cash equivalent unless it is RESCTRICTED from being exchanged or used to settle a liability for atleast twelve months after the end of reporting period”

Answer 2

Current

Question 3

Measurement

What is the measurement of Local currency?

Answer 3

Face Value

Question 4

Measurement

What is the measurement of foreign currency?

Answer 4

Face Value but translated to Philiipine Peso, using CLOSING RATE at YEAR END.

Question 5

Measurement

What is the measurement in CLOSE BANK or Bank in bankruptcy?

Answer 5

Estimated Realizable Value

Question 6

Composition

What are the three classifications of cash?

Enumerate

Answer 6

Cash on Hand
Cash in Bank
Cash Fund

Question 7

Composition

Enumerate the items under CASH ON HAND

Enumeration (CCO)

Answer 7

CCO
Coins and Currencies
Checks
Others

Question 8

Composition

Enumerate items under checks and if ppart of cash

Enumerate

Answer 8

1.Normal customer checks- Part of cash
2. Cashier’s, Manager’s, Travelers check- part of cash
3. Undelivered checks, post dated checks.
(a) if satin-Cash-revert to payable
(b) if sa other entity-receivable
4. Stale checks-
(a) if satin-Cash-revert to payable/ other income
(b) if sa other entity-receivable

Question 9

Composition

What are the other instruments under the “cash classification”

Answer 9

Money Order- part of cash
Bank Drafts- part of cash

Question 10

Terms and Definitions

This is a safe alternative to cash or a personal check, usually issued by a government or banking institution, that works similarly to a check. This can be cashed or deposited into a bank account.

These are readily accepted and converted to cash and are often used by people without access to a standard checking account. They are an acceptable form of payment for debts, both personal and business, and can be purchased for a small service fee from most institutions.

Answer 10

Money order

Question 11

Terms and Definitions

Also known as a banker’s cheque, is a financial instrument purchased from the bank and used for remitting it at a later stage by the second party. In a given time, the second party can present this draft to any bank to withdraw the amount of money mentioned in the draft. It is a guarantee, which is available for the draft holder, that he will receive the specified amount on presenting the same.

Answer 11

Bank Draft

Question 12

Compostion

What are the items under Cash in Bank?

Answer 12

1. Demand deposit
2. Savings deposit
3. Escrow deposit
4. Time deposit
5. Compensating balance
6. Bank overdraft