F3 Cash and Cash Equivalents

Question 1

Cash and Cash Equivalents must

Answer 1

Massure within 90 days of issuance

Question 2

How do we treat a bank balance that is negative and the other positive when they are the same banks VS when they are different banks?

Answer 2

Same banks net them
Different banks separate them one being a current asset and the other a current liability.

Question 3

What is a bank draft and how is it treated

Answer 3

Bank drafts are guaranteed payments from the issuing bank money in and they are treated as a Cash and Cash Equivalent.

Question 4

How are cash in bonds sinking funds treated?

Answer 4

This is restricted cash and is not part of Cash and Cash Equivalents

Question 5

How do we treat post-dated checks after BS date?

Answer 5

Not included in Cash and Cash Equivalents.

Question 6

How do we treat money markets?

Answer 6

Cash and Cash Equivalents

Question 6

How do we treat marketable securities such as debt and equity securities?

Answer 6

These are not Cash and Cash Equivalents because they are investments.

Question 7

How do we treat treasury bills maturing in 90 days or less?

Answer 7

Cash and Cash Equivalents

Question 8

When a check is received what do we look at?

Answer 8

We look at the date if it is after BS date we don’t include it in Cash and Cash Equivalents but if it is as of the BS date we include it in Cash and Cash Equivalents.

Question 9

What do we look at when issuing a check?

Answer 9

The date in which we issued it, if its after the BS date we leave it in Cash and Cash Equivalents if not we reduce it from Cash and Cash Equivalents