Accounting Principles Chapter 7: Reporting Cash

Components of Cash and Cash Equivalents

• Cash on the balance sheet consists of cash on hand, cash in banks, and petty cash.

• Cash equivalents are defined as highly liquid short-term investments.

Presentation on the Balance Sheet

• Cash is traditionally the first item listed on the balance sheet because it is the most liquid asset.

• Restricted cash must be reported separately from general cash balances.

• Bank overdrafts are classified and reported as a liability rather than being offset against cash.

Chapter Information and Copyright

• Source: Accounting Principles Tenth Canadian Edition by Weygandt, Kimmel, Mitchell, Warren, and Novak.

• Content Focus: Chapter 7 Internal Control and Cash, Learning Objective 5.

• Copyright: ©2025 John Wiley & Sons Canada, Ltd.