1&2 - cash and cash equivalents

cash

most liquid asset

medium of exchange

financial asset

contractual right to receive cash or another financial asset from another entity

allows entity to receive cash or another financial asset from another company

PAS 32: Financial Instruments: Presentation

where was financial asset defined in

cash

any instrumental that is acceptable for deposit at face value to a bank

cash on hand, cash in bank, cash funds

cash’s 3 categorizations

cash on hand

cash in bank

cash funds

cash inside one’s wallets

savings and checking accounts

petty cash fund, payroll fund, travel fund

funds

must be set aside for current purposes

cash

shown as first otem in current assets section of SFP

Face value

cash in local currency is reported at ______ value

RA 6426

Foreign currency deposit act of the PH

Foreign currencies and deposits are covered by ________

also known as

cash equivalents

short-term, highly liquid invstments that are readily convertible to known amounts of cash subject to insignificant risk of changes in value

90

PAS 7 allows investments purchased ___ days or less before maturity date to be classified as cash equivalents

90-day time deposits, time deposits purchased 3 months prior to maturity, treasury bills, commercial papers, certificate of deposits, and money market placements

cash equivalents ex

purchased by entity 3 months or 90 days prior to maturity

for an instrument to be classified as cash equivalent

short term investments

long-term investments

naturity dates are over 90 days but do not exceed one year

maturities beyond one year

compensating balance

minimum balance that an account holder should maintain in bank account

are considered cash unless there is legal restriction on withdrawal

postdated checks

checks that bear a future date on its face

stale checks

checks received by an entity but not yet negotiated within a period of time after date of issue

aft 6 months dishonored na usually

unless issuer replaces stale check with a currently dated one

condition for stale check to be part of cash

nsf check

check previously received by an entity from customer

noncurrent asset

cash set aside for acquisition of noncurrent assets is a

bank overdraft

when entity makes withdrawals or writes checks exceeding balance of amount it currently has w bank, the resulting negative balance is

controller or accountant

internals control group usually work with internaul audit office:

1. separation of cash duties (manager checks, accountant summarizes)

2. limiting access to cash (cash custodian)

3. proper documentation of cash receipts

4. strict control of cash disbursements

basic internal control measures

checks

all disbursements with significant amts should be done thru

logbook

official receipt

cash processing clerk should immediately record in a

_ should be prepared for every cah inflow as supporting documents

yes

do cash in banks earn interest at prevailing bank deposit rates?

voucher system

cash voucher

a method for authorizing and controlling cash disbursements

a document that supports a cash transaction

1. pruchasing order

2. sales invoice

3. receiving report

4. sales invoice of seller, copy of purchase order, and receiving report

5. voucher register, unpaid vouchers file

6. check register

accounting process under voucher system:

1. the ___ is prepared by an officer

2. the supplier prepares a ____ and ships out to entity thr goods ordered together w copy of ____

3. the receiving clerk of entity prepares a _____sent to the seller

4. are given to the accountant

5. if walang error, accountant tells bookkeeper to record transaction as purchase on account in the _________. for every creditor, bookkeeper preares an __________ which replaces accounts payable ledger account normally used under non-voucher system

6. on scheduled date of payment, check is prepared by payment clerk for approval. once check is signed, payment is recorded in ____

imprest system

a control measure for both cash receipts and cash disbursements, where all payments of assets, liabilities, and expenses should be made by check except for small expenditures

cash recripts journal

voucher system

the control of cash receipt becomes more effective if a merchandising concern business uses special journals particularly the

the control of cash disbursement which requires hat disbusements be ade by check instead of cash is taken care of what system

no portion of total cash collections for the day should be used for payments of assets, liabilities, or expenses

intact means

petty cash fund

petty cash custodian

set up by an entity out of which expenses are paid in imprest system

who is person in charge

petty cash book

the petty cash custodian files receipt with petty cash voucher and record expense in

petty cash book

cash payments journal

serves as schedule for small expenses

upon replenishment of petty cash fund, specific expense accounts are recorded in entity’s

savings account

time deposit

checking acct or demand deposit acct

3 types of deposit accts

bank statement

all increases and decreases in entity’s checking account are summarized in

bank reconciliation

what accountant prepares which is a process that shows the items which caused two cash balances to be an unequal

bank credit memo

collections of an entity that are directly made to the bank, interest earned on entitys account

error is deducted

error is added

if overstatement of :

deposit

check

timing difference

errors

reconciling items two types

book to bank balance

bank to book baalnce

adjusted balances method

format of bank reconciliations