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  • Cash and Cash Equivalents

    Transféré par

    rovi dioso
    50 vues3 pages
    Cash and cash equivalents include undeposited cash, cash items awaiting deposit like checks and money orders, and short-term highly liquid investments acquired less than 3 months before maturity. Cash is used for current operational expenses like payroll and interest payments. Excess cash may be invested in preference shares redeemable within 3 months. Bank overdrafts occur when issued checks exceed deposits. Compensating balances are minimum checking account balances not legally restricted. Undelivered checks are recorded but not given to payees. Postdated checks are recorded at delivery but payment occurs on check date. Stale checks are not encashed within 6 months. Petty cash uses an imprest system with initial cash balance and replenishment upon expenses documentation.

    Description originale:

    Intermediate accounting vol. 1 (2019) by valix, valix and peralta

    Titre original

    I.A

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    Cash and cash equivalents include undeposited cash, cash items awaiting deposit like checks and money orders, and short-term highly liquid investments acquired less than 3 months before maturity. Cash is used for current operational expenses like payroll and interest payments. Excess cash may be invested in preference shares redeemable within 3 months. Bank overdrafts occur when issued checks exceed deposits. Compensating balances are minimum checking account balances not legally restricted. Undelivered checks are recorded but not given to payees. Postdated checks are recorded at delivery but payment occurs on check date. Stale checks are not encashed within 6 months. Petty cash uses an imprest system with initial cash balance and replenishment upon expenses documentation.

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    © All Rights Reserved
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    50 vues3 pages

    Cash and Cash Equivalents

    Transféré par

    rovi dioso
    Cash and cash equivalents include undeposited cash, cash items awaiting deposit like checks and money orders, and short-term highly liquid investments acquired less than 3 months before maturity. Cash is used for current operational expenses like payroll and interest payments. Excess cash may be invested in preference shares redeemable within 3 months. Bank overdrafts occur when issued checks exceed deposits. Compensating balances are minimum checking account balances not legally restricted. Undelivered checks are recorded but not given to payees. Postdated checks are recorded at delivery but payment occurs on check date. Stale checks are not encashed within 6 months. Petty cash uses an imprest system with initial cash balance and replenishment upon expenses documentation.

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    © All Rights Reserved
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    sur 3

    CHAPTER 1: CASH AND CASH EQUIVALENTS

    -undeposited cash -UNRESTICTED as to withdrawal -Set Aside


    -cash items awaiting deposit -saving deposit (Current)
    - checks -demand deposits/ checking accounts -PCF
    -Bankdrafts -payroll
    -Moneyorders -dividend

    -Short term and highly liquid investments


    -Acquired 3 months before maturity
    ❌Equity Securities❌ - no maturity date
    ✔Preference shares redemption- ✔✔3 months before maturity✔✔

    Note: Investment of excess Cash (current) should be invested


    Cash- face value
    Foreign currency - current exchange rate
    Bankruptcy/ financial difficulty- cash would be written to estimated realizable value

    CASH FUND
    Set aside in:
    ✔Current operation - PCF, payroll, travel, interest, dividend, Tax
    ❌Non Current (long term investment) - sinking fund, preference share redemption, contingent
    fund,insurance fund, fund for PPE

    BANK OVERDRAFT
    -cash in bank has a credit balance
    -result: the issuance of checks in exess of the deposits
    -should not be offset against other bank accounts with d.ebit bal.
    Note: if inmaterial - can be offset against other bank account

    COMPENSATING BALANCE
    -minimm checking or demand deposit acc. Balance
    ✔Not legally restricted- cash
    ❌Legally Restricted- Not considered either short-term or long-term

    UNDELIVERED/ UNRELEASED CHECK


    -merely drawn and recorded but not given to the payee before the end of reporting period
    Note: no payment when check is pending delivery bcoz Check is still Subject to entitys control and may cancelled
    anytime

    Entry: Cash xx
    A/P xx
    POSTDATED CHECK DELIVERED
    -future Date
    -
    Original Entry: Recording
    A/P xx
    Cash xx

    Note: Reversed therefore Restored the Cash balance


    Reason: no payment until check presented to bank for encashment

    Entry: Cash xx
    A/P xx

    STALE CHECK
    -check not encashed by the payee within a relative period of time
    Note: stale if check not encashed within 6 months

    If inmaterial
    Entry: Cash xx
    Miscellaneous income xx

    If material and liability expected to continue


    Entry: Cash xx
    A/P xx

    �������������
    CASH SHORTAGE CASH OVERAGE

    Entries:

    Only Temporary:
    Cash short or over xx Cash xx
    Cash xx Cash short or over xx

    Cashier/Custodian held responsible:


    Due from casier xx Due to Cashier xx
    Cash xx Payable to Casier xx

    PETTY CASH FUND


    - money set aside for small expenses

    Imprest Fund System Fluctuating Fund System


    Establishment: PCF xx PCF xx
    Cash in bank xx Cash in bank xx

    Payment for Expenses: No formal entries Expenses xx


    PCF xx

    Replenishment: Expenses xx PCF xx


    Cash in bank xx Cash in bank xx
    Unreplenished: Expenses xx No formal entries
    PCF xx

    Increase: PCF xx PCF xx


    cash in bank xx cash in bank xx

    Decrease: Cash in bank xx Cash in bank xx


    PCF xx PCF xx

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