Cash & Cash Equivalents, Balance Sheet

Question 1

Current Assets

Answer 1

assets that will be used up or converted into cash within one year or the operating cycle, whichever is longer.

Question 2

Current Liabilities

Answer 2

liabilities that will be settled within one year or the operating cycle, whichever is longer.

Question 3

Cash

Answer 3

the most liquid asset of an enterprise, this it is usually the first item presented in the current assets section of the balance sheet

Question 4

Cash Equivalent

Answer 4

a security that is easily converted into cash with an original maturity of 90 days or less.

Question 5

Examples of cash and cash equivalents

Answer 5

• coin and currency on hand (petty cash)
• Money market accounts
• unmailed checks
• savings accounts
• CDs with an original maturity of 3 months or less
• negotiable paper (bank checks, travelers checks, money orders)

Question 6

Items excluded from cash

Answer 6

• compensating balances
• postdated checks or NSF
• Overdraft protection
• Restricted cash
• Postage stamps

Question 7

Compensating Balances

Answer 7

legally restricted deposits that are either a current asset or a non-current asset, but not considered part of cash. If funds are NOT legally restricted, present them along with cash.

Question 8

Overdraft protection

Answer 8

• If in the same bank, net them, if positive then show it as cash, if negative show it as a current liability.
• If in different banks, show the positive as an asset, and the negative as a current liability.

Question 9

Restricted cash

Answer 9

• Current - restricted for a current asset or liability (segregated from cash).
• Non-current - restricted for a concurrent asset or liability (either other assets or investments).

Question 10

IFRS defines a financial instrument as….

Answer 10

Any contract that gives results in financial assets of one entity and a financial liability or equity instrument of another entity.

Question 11

Financial Asset (IFRS)

Answer 11

• cash
• an equity instrument of another entity
• a contractual right to 1) receive cash or another financial asset from another entity; oR 2) exchange financial assets or financial liabilities with another entity on potentially favorable terms.
• a contract that will be settled in the entity’s own equity instruments.

Question 12

Financial liability (IFRS)

Answer 12

A contractual obligation

- to deliver cash or another financial asset to another entity; or
- to exchange financial assets or financial liabilities with another entity on potentially unfavorable terms.

A contract that will be settle in the entity’s equity instruments

Question 13

Statement of Earnings & Comprehensive Income

ON-TIDe-N-OC

Answer 13

• Operating Income (O)
• Non-Operating Income (N)
• Taxes (current & deferred) (T)
  = Income from continuing operations (I)
• Discontinued component unit (De) - net of tax
  = Net Income (N)
• Other Comprehensive Income (O) - DENT
  = Comprehensive Income (C)

Question 14

Other Comprehensive Income (DENT)

Answer 14

• Derivative Cash Flow Hedge Gains/ Loss
• Excess adjustment of Pension PBO and FV of Plan assets at year end
• Net Unrealized holding gains (AFS) arising during period
• Translation adjustment of Foreign currency