CASH AND CASH Equivalents Notes/Summary (simplified) PDF

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Summary

CASH AND CASH EQUIVALENTS NOTES (simplified) Cash - money and it’s equivalent that is readily available for unrestricted use.COMPOSITION: Cash on Hand Bank drafts Checks drawn (postdated & undelivered), certified that are received from customers, cashier, manager, traveller, and personal, M...

Description

CASH AND CASH EQUIVALENTS NOTES (simplified)  Cash - money and it’s equivalent that is readily available for unrestricted use. COMPOSITION: 1) Cash on Hand - Bank drafts - Checks drawn (postdated & undelivered), certified that are received from customers, cashier, manager, traveller, and personal, Money Orders, Coins and Curriencies. 2) Cash in Bank -Demand deposit/checking account, Savings account 3) Cash Fund -Change fund, dividend, interest, payroll, petty cash,revolving, tax, travel, others which are used in current operation. EXCLUDED: 1) Postdated checks received 2) IOUs 3) Cash fund not used in the current operation. - Sinking Fund, Plant Expansion, Depreciation, Preference share redemption, Contingency, Insurance. 4) Bank Overdrafts 5) Deposit in escrow 6) Unused credit line - disclosed only 7) Deposits in bank that went bankcrupt - A/R is measured @ NRV 8) Restricted compensating balance MEASUREMENT: Face Value; Current exchange rate for cash in foreign currency.  Cash Equivalent - Short term and highly liquid investments. - Acquired 3 months before maturity date. INCLUDED: 1) Treasury bills, bonds, notes 2) Money market/Commercial Paper 3) # month time deposit 4) Preference Share 5) Investment of excess cash - less than or equal to 3 months (cash equivalent) - more than 3 months but less than or equal to 1 yr (current asset) - more than 1 yr (non-current) EXCLUDED: 1) Equity Securities 2) Treasury Shares NOTE: Anything restricted is EXCLUDED in cash and cash equivalent.

ADJUSTING ENTRY for: 1) Undelivered Check (drawn) 2) Postdated (drawn)

checks

3) Postdated (received)

checks

Cash

Cash

xx Accounts Payable

xx

xx Accounts Payable

xx

Accounts Receivable Cash

xx xx

4) Stale Checks

Cash xx Miscellaneous Income(if immaterial) / Accounts Payable xx

5) Cash Shortage

Cash Shortage/Overage xx Cash xx -------------------CLOSE--------------Receivable from name / Loss on cash shortage xx Cash Shortage/Overage Cash xx Cash Shortage/Overage xx -------------------CLOSE--------------Cash Shortage/Overage xx Payable to name / Gain from Cash Overage xx

6) Cash Overage...