Intermediate accounting valix 2020 PDF

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Summary

CHAPTER 1 Cash includes money and any other negotiable instrument that is payable in money and acceptable by the bank for deposit and immediate credit Cash must be readily available in the payment of current obligation and not be subject to any restrictions. Cash equivalents are the total value of c...

Description

CHAPTER 1

1.

Cash includes money and any other negotiable instrument that is payable in money and acceptable by the bank for deposit and immediate credit

2.

Cash must be readily available in the payment of current obligation and not be subject to any restrictions.

3.

Cash equivalents are the total value of cash on hand that includes items that are similar to cash. Only highly liquid investment acquired 3 months before maturity can qualify as cash equivalent.

4.

Cash is measure at face value. While cash in foreign currency is measured at the current exchange rate.

5.

Cash and cash equivalent should be shown as the first line item under current asset.

6.

(1) If the term is more than 3 months or less, such instrument is classified as cash equivalent and therefore included in the caption “cash ang cash equivalent” (2) If the term is more than 3 months but within one year, such investments are classified as short-term financial assets or temporary investment and presented separately as current assets. (3) If the term is more than one year, such investment is classified as noncurrent or long-term investment.

7.

Cash in foreign currency should be translated to Philippine’s pesos using the current exchange rate. Deposit in foreign countries which are not subject to any foreign exchange restriction are included in cash.

8.

The classification of cash fund as current ang non-current should parallel the classification of related liability.

9.

When the cash in bank account has credit balance, it is said to be overdraft. The credit balance in the cash in bank account results from the issuance of checks in excess of the deposit.

10.

A compensating balance is a minimum deposit that must be maintained in a bank account by a borrower. The borrower cannot use the money but is required to disclose it in the borrower's notes attached to its financial statements.

11.

Undelivered check are the company's checks drawn and recorded but are not actually issued or delivered to the payees as of the reporting date. Post-dated cheques are dated in such a form that they can only be cashed in in the future. Post-dated cheques may be dated in the future; it may be months or years from the date of issue. Stale cheques are outdated cheques issued to the bank after the date of payment has expired.

12.

Cash shortage is where cash counts show cash which is less that the balance per book, a cash shortage is to be recorded. while cash overage is where cash shows cash which is more than the balance per book, a cash overage is to be recorded.

13.

Imprest system is a system of control of cash which requires that all cash receipts should be deposited intact and all cash disbursement should be made by means of check.

14.

A petty cash fund is a money set aside to pay small expenses which cannot be paid conveniently by means of check, to pay for minor or incidental expenses, such as office supplies or employee reimbursements.

15.

The imprest fund system is the one who usually followed in handling petty cash transaction. While the system called “fluctuating fund system” because the check drawn to replenishment the fund does not necessarily equal the petty cash disbursements....