InterAcctg- General

Money

The standard medium of exchange in business transactions.

Money

Refers to the currency and coins which are in circulation and legal tender.

Cash

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

Postdated checks

Temporarily unacceptable by the bank for deposit and immediate credit or outright encashment, thus it can’t be considered as cash yet.

IFRS 18, paragraph 99

An entity shall classify an asset as current when the asset is cash or a cash equivalent unless it is restricted to settle a liability for more than twelve months after the end of the reporting period.

True

TRUE OR FALSE.

An item must be unrestricted in use to be reported as cash?

Not Cash

CASH OR NOT CASH.

Bond Sinking Fund

Fund for Acquisition of PPE

Restricted Funds

Not available for immediate payment of obligations or the intent of management is to use the resources for specific purpose.

Cash on Hand

Includes undeposited cash collection and other cash items awaiting deposit such as customer’s checks, cashier’s or manager’s check, traveler’s check, bank drafts and money orders.

Cash in Bank

Includes demand deposit or checking account and saving deposit which are unrestricted as to withdrawal.

Cash Fund

Set aside or current purposes such as petty cash fund, payroll fund, and dividend fund.

PAS 7, paragraph 6

Defines cash equivalents as short-term and highly liquid investments that are readily convertible into cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rate.

False

TRUE OR FALSE.

PAS 7 further states that only highly liquid investment acquired three months before maturity can’t qualify as cash equivalents.

To minimize price fluctuations due to interest changes.

What is the reason for the three-month rule in PAS 7?

False

TRUE OR FALSE.

A highly marketable security with a fluctuation price price is equivalent to cash.

True

TRUE OR FALSE.

Cash equivalents although so near cash are excluded from the term “cash”.

False

TRUE OR FALSE.

Equity securities or equity investments can qualify as cash equivalents because shares do not have a maturity date.

True

TRUE OR FALSE.

Preference shares with specified redemption date and acquired three months before redemption date can qualify as cash equivalents.

Not Cash Equivalent

CASH EQUIVALENT OR NOT CASH EQUIVALENT.

One-year BSP treasury bill - matures in two months.

Cash Equivalent

CASH EQUIVALENT OR NOT CASH EQUIVALENT.

Three-year BSP treasury bill - acquired one-month before maturity.

To earn interest income.

What is the purpose for an excess cash to be invested in time deposits, money market instruments, and treasury bills?

Cash Equivalents

CLASSIFICATION.

If the term of investment is three months or less?

Short-term Investments (under current assets)

CLASSIFICATION.

If the term of investment is more than three months but within one year?

Long-term Investments

CLASSIFICATION.

If the term of investment is more than one year?

Current Assets

If long-term investments become due within one year from the end of the reporting period, it is reclassified as?

Face Amount

Cash is measured at?

Estimated Realizable Value

If a bank or financial institution holding the funds of an entity is in bankruptcy or financial difficulty, cash should be written down to _________ if the amount recoverable is estimated to be lower than the face amount.

False

TRUE OR FALSE.

Cash in foreign currency shouldn’t be translated to Philippine Peso.

True

TRUE OR FALSE.

Deposits in foreign countries which are not subject to any foreign exchange restriction are included in cash.

Non-current Assets and the restriction clearly indicated.

What is the classification of deposits in foreign countries subject to foreign exchange restriction?

First Line Item

The caption cash and cash equivalents should be shown as the _________ under current assets.

True

TRUE OR FALSE.

Details comprising the cash and cash equivalents should be disclosed in the notes to financial statements.

False

TRUE OR FALSE.

If the cash fund is set aside for use in current operations or for payment of current obligations, it is a current asset and excluded as part of cash and cash equivalents.

True

TRUE OR FALSE.

If the cash fund is set aside for noncurrent purpose or payment of noncurrent obligations, it is shown as long-term or noncurrent investments.

True

TRUE OR FALSE.

The classification of a cash fund as current or noncurrent should parallel the classification of related liability.

True

TRUE OR FALSE.

A cash fund set aside for the acquisition of a noncurrent asset should be classified as noncurrent regardless of the year of disbursement.

Overdraft

When the cash in bank has a credit balance, it is said to be an __________.

Current Liability

A bank overdraft is classified as a ___________ and should not offset against other bank accounts with debit balances.

False

TRUE OR FALSE.

Overdrafts are permitted in the Philippines.