INTACC (QE) Flashcards
includes money and any other negotiable instrument that is payable in money and acceptable by the bank for deposit and immediate credit, it must also be UNRESTRICTED in use, that it is readily available in the payment of current obligations and NOT be subject to any restrictions.
Cash
set aside for current operations.
Cash Fund
Period or Term
Cash and Cash Equivalents
Less than 3 months
Term or Period
Current Assets
3 months to 1 year
demand deposit & savings account, unrestricted.
Cash in bank
includes legal tender, bills, coins, checks received but not deposited, and checking and savings account.
Cash
are any short-term investment securities that have maturity periods of 90 days or less. This includes bank certificates of deposits, banker’s acceptances, treasury bills, commercial paper and other money market instruments.
Cash Equivalents
Investments in liquid securities such as ____ and ____ are not included in cash and equivalents.
stocks
bonds
is a schedule the company (depositor) prepares to reconcile, or explain, the difference between the cash balance on the bank statement and the cash balance on the company’s books.
Bank Reconciliation
The company prepares a bank reconciliation to determine its ________________and prepare any entries to ____________ in the ledger.
actual cash balance
correct the cash balance
is a record of your bank account transactions, typically for one month, prepared by the bank.
Bank Statement
is anything that doesn’t match or doesn’t exist on both places
(company and bank). A _________ will be added or subtracted to the bank or book side of the reconciliation.
Reconciling Item
typically a day’s cash receipts recorded in the depositor’s books in one period but recorded as a deposit by the bank in the succeeding period. The most common __________ is the cash receipts deposited on the last business day of the month.
Deposit in Transit
those issued by a depositor but not paid by the bank on which they are drawn. The party receiving the check may not have deposited it immediately.
Outstanding Checks
reflect deductions for such items as service charges, NSF checks, safe-deposit box rent, and notes paid by the bank for the depositor.
Debit Memos
reflect additions for such items as notes collected for the depositor by the bank and wire transfers of funds from another bank in which the company sends funds to the home office bank.
Credit Memos
refer to claims against others for money, goods or services arising from sale of merchandise or money lent or the performance of services. For accounting purposes however, the term is employed to mean claims expected to be settled by the receipts of cash.
Receivables
Receivables are recognized when title to _______________ to the buyer or when _____________ take place. The point at which title passes may vary with the terms of the sales.
title to the goods passes
transfer of resources
Measurement of Receivables
Face Value
Discounted Amount (Present Value)
Receivable are valued at their ____________ or their expected _______.
net realizable value
cash value
is the estimated amount of cash that will be collected or realized from receivables.
Net realizable value
Refers to claims arising from credit sale of merchandise or services in the ordinary course of the business.
Trade Receivables
Represent claims arising from sources other than the sale of merchandise or services in the ordinary course of the business.
Non-trade Receivables
Receivables which are expected to be realized cash within the normal operating cycle or one year, whichever is longe
Current Assets
Receivables which are expected to be realized beyond one year or those receivables which are not currently collectible.
Non-current Assets
evidenced by a formal instrument which is the promissory note.
Notes Receivable
short term, unsecured and informal credit arrangements (open accounts).
Accounts Receivable
used when individual account balances are relatively large. There is a reason to believe that there may be a substantial number of accounts in dispute or with inaccuracies or irregularities
Positive Confirmation
internal control procedures regarding receivables are considered effective. - a large number of small balances are involved.
Negative Confirmation
this also known as volume discount or quantity discount. It is a means of adjusting the list price for different buyers or varying quantities. Accounts receivables should be recorded net of ________.
Trade Discounts
this is a reduction from the invoice price by reason or prompt payment.
Cash Discount
means that ownership to the merchandise is transferred to the buyer only upon reaching the point of destination or upon the buyer’s receipt of merchandise.
FOB Destination
means that ownership to the merchandise is transferred to the buyer upon shipment thereof.
FOB Shipping Point
means that the freight charges on the merchandise shipped is to be paid by the buyer.
Freight Collect
means that the freight charges on the merchandise shipped was already paid by the seller.
Freight Prepaid
this requires the recognition of bad debt loss if the accounts are doubtful of collection.
Allowance Method
this requires the recognition of bad debt loss only when the account proved to be worthless or uncollectible.
Direct write off method
Cash is measured at
Face value
But __________ received cannot be considered as cash yet because the __________ are unacceptable by the bank for deposit and immediate credit or outright encashment.
postdated checks
___________ with specified redemption date and acquired three months before redemption date can qualify as cash equivalents.
Preference Shares
If the term is three months or less, such instruments are classified as __________.
Cash equivalents
If the term is more than three months but within one year, such investments are classified as short-term or temporary investments and presented separately as _________.
current assets
Cash fund used for current operations or payment of current obligation are part of
cash and cash equivalents
Examples of Cash fund that are cash and cash equivalents
Petty cash find
payroll fund
travel fund
interest fund
dividend fund
tax fund
The _________ is a system of control of cash which requires that all cash receipts should be deposited intact and all cash disbursements should be made by means of check.
imprest system
Under this system, the disbursements from the petty cash fund are immediately recorded in contradistinction with the ______ fund system where the disbursements are recorded upon the replenishment of the fund.
Fluctuating Fund System
Sa system na to padagdag ng padagdag yung petty cash kunwari may tira from last period
Fluctuating Fund System
Sa system na to back to the budget para sa petty cash kada nag rereplenish kunwari 10k ang petty cash tapos may natira na 2k dadagdagan lang ng 8k pag nag replenish
Imprest System
Sa system na to nirerecord lang yung expenses or disbursements pag mag rereplenish ng fund.
Imprest Fund System
Same lang siya sa savings deposit pero may interest
Time Deposit
Book Reconciling Items
Credit Memo
Debit Memo
Errors
Bank Reconciling Items
DIT
Outstanding Checks
Errors
Examples of Debit Memos
NSF
Technically defective checks
Bank Service Charge
Reduction of Loan
are checks deposited but returned by the bank because of insufficiency of fund.
NSF Checks
are checks deposited but returned by the bank because of technical defects such as absence of signature or countersignature, erasures not countersigned, mutilated checks, conflict between amount in words and amount in figures.
Defective checks
pertains to amount deducted from the current account of the depositor in payment for loan which the depositor owes to the bank and which has already matured.
Reduction of Loan
refer to items not representing checks paid by bank which are charged or debited by the bank to the account of the depositor but not yet recorded by the depositor as cash disbursements.
Debit Memos
are collections already recorded by the depositor as cash receipts but not yet reflected on the bank statement.
Deposit in Transit
are checks already recorded by the depositor as cash disbursements but not yet reflected on the bank statement.
Outstanding Checks
Under this method, the book balance and the bank balance are brought to a correct cash balance that must appear on the statement of financial position
Adjusted Balance Method
Under this method, the book balance is reconciled with the bank balance or the book balance is adjusted to equal the bank balance.
Book to bank Method
Under this method, the bank balance is reconciled with the book balance or the bank balance is adjusted to equal the book balance.
Bank to Book Method
refer to cash receipts or all items debited to the cash in bank account
Book Debits
refer to cash disbursements or all items credited to the cash in bank account.
Book Credits
refer to all items credited to the account of the depositor which include deposits acknowledged by bankband credit memos.
Bank Credits
Example of Bank Credits
Acknowledged Deposits
Credit Memos
Example of Bank Debits
Debit Memos
Checks Paid
refer to all items debited to the account of the depositor which include checks paid by bank and debit memos.
Bank Debits
If the cash balance shown in the accounting record is less than the correct cash balance and neither the entity nor the bank has made any errors, there must be
a. Deposits credited by the bank but not yet recorded by the depositor
b. Deposits in transit
c. Outstanding checks
d. Bank charges not yet recorded by the depositor
C?
Bank reconciliations are normally prepared on a monthly basis to identify adjustments needed in the depositor’s records and to identify bank errors. Adjustments on the part of the depositor should be recorded for
a. Bank errors, outstanding checks and deposits in transit.
b. All items except bank errors, outstanding checks andbdeposits in transit.
c. Book errors, bank errors, deposits in transit outstanding checks. and
d. Outstanding checks and deposits in transit.
A
Bank statements provide information about all of the following, except
a. Checks cleared during the period
b. NSF checks
c. Bank charges for the period
d. Errors made by the depositor
D
A cash discount is known as ________ on the part of the seller and a _________ on the part of the buyer
sales discount
purchase discount
The sales discount forfeited account is classified as other
income
Aging the accounts receivable is also known as
SFP Approach
Percent of sales is also known as
Income Statement Approach
refers to the period beyondbthe maximum credit term In the example, the credit term orbcredit period is 30 days.
past due
The allowance for doubtful accounts normally has ____ balance
credit
FOB shipping point is usually paid for by the _____,
Buyer
FOB destination is usually paid for by the _____
seller
value added tax account is a
cash and cash equivalents
adjusted cash in bank is computed by
balance per bank statement
DIT
Outstanding Checks
Or Add CR Less DM
An erroneous credit to an account is ___ in cash in bank
DEDUCTED
How to compute for unadjusted cash in bank per ledger?
Get the adjustment bank balance then squeeze the items such as service charges, debit and credit memo
How to get cash balance per bank statement
cash balance per bank statement is unadjusted thus we should get first the adjusted book balance then squeeze items such as DIT OS AND ERRORS
FORMULA ADJUSTED BALANCE METHOD
Balance per book
Add: Credit Memo (Note collected by the bank)
Less: Debit Memo (NSF Service Charge)
Total : Adjusted book balance
Balance per bank
Add: DIT
Less: Outstanding Checks & Errors
Total: Adjust bank balance
Formula Bank to Book
Bank balance
Add: DIT & DM
Less: OS & CM
Adjusted book
Book to Bank
Book balance
Add: CM & OS
Less: DM & DIT
Adjusted Bank
DIT FORMULA
DIT- beg
Add: Cash receipts for deposits (Book Debits) Less: CM for Note Collected last month
Less: Deposits acknowledge (Bank Credits) less: CM for Note collected current month)
DIT- end
Outstanding Checks Formula
OS- beg
Add: Checks drawn (Book credits) Less: DM last month
Less: Checks acknowledge paid (Bank debits) Less: DM current month
OS- end
Dagdag siya sa part ng bank
(Cash receipts of deposits)
Book debits
Bawas siya sa part ng bank
(cash disbursements or check drawns)
Book credits
Dagdag siya sa part ng depositor or account holder
(Deposits, Note collected from customers)
Bank credits
Bawas siya sa part ng depositor or account holder
(Checks drawn, NSF checks, service charge etc)
Bank debits
Pledge - Loan discounted
Net Proceeds Formula
Face amount of loan
Less: Interest deducted in advance
Pledge
CM Formula
Face amount of note payable
Less: Discount
CM
more formal type of pledging
Assignment
Equity in asdigned accounts formula
AR- assigned
Less: Note payable
