Scribd Logo
Upload

Welcome to Scribd!

  • 6 views

    Cash and Cash Equivalents-1-1

    Uploaded by

    Darren Peñaredondo
    Cash and cash equivalents refer to highly liquid assets that are easily convertible to cash. There are two types of cash: cash on hand and cash in the bank. Cash equivalents are short-term investments that can be converted to cash within 3 months with little change in value, such as treasury bills. Bank reconciliation balances the cash records in the company's books with the bank statement and identifies reconciling items like outstanding checks and deposits in transit. Proof of cash is a two-date reconciliation that balances beginning, receipts, disbursements and ending balances between the books and bank.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Cash and Cash Equivalents-1-1

    Uploaded by

    Darren Peñaredondo
    6 views2 pages
    Cash and cash equivalents refer to highly liquid assets that are easily convertible to cash. There are two types of cash: cash on hand and cash in the bank. Cash equivalents are short-term investments that can be converted to cash within 3 months with little change in value, such as treasury bills. Bank reconciliation balances the cash records in the company's books with the bank statement and identifies reconciling items like outstanding checks and deposits in transit. Proof of cash is a two-date reconciliation that balances beginning, receipts, disbursements and ending balances between the books and bank.

    Original Description:

    Original Title

    CASH AND CASH EQUIVALENTS-1-1

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Cash and cash equivalents refer to highly liquid assets that are easily convertible to cash. There are two types of cash: cash on hand and cash in the bank. Cash equivalents are short-term investments that can be converted to cash within 3 months with little change in value, such as treasury bills. Bank reconciliation balances the cash records in the company's books with the bank statement and identifies reconciling items like outstanding checks and deposits in transit. Proof of cash is a two-date reconciliation that balances beginning, receipts, disbursements and ending balances between the books and bank.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    6 views2 pages

    Cash and Cash Equivalents-1-1

    Uploaded by

    Darren Peñaredondo
    Cash and cash equivalents refer to highly liquid assets that are easily convertible to cash. There are two types of cash: cash on hand and cash in the bank. Cash equivalents are short-term investments that can be converted to cash within 3 months with little change in value, such as treasury bills. Bank reconciliation balances the cash records in the company's books with the bank statement and identifies reconciling items like outstanding checks and deposits in transit. Proof of cash is a two-date reconciliation that balances beginning, receipts, disbursements and ending balances between the books and bank.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    CASH AND CASH EQUIVALENTS

    Things to remember about cash:

    - It is one of the most liquid asset and the most prone to lose due to theft or mishandling
    - Must be unrestricted and available for use
    - Cash is money, used as currency and exchange
    - There are two types of Cash:
     Cash on hand – simply put, it is Cash that you have on hand and not deposited in a bank
     Cash in Bank – it is cash that was deposited in the bank and can be withdrawn
    - Cash funds are cash that will be used for a specified reason.
    Cash fund for current asset =  ex. Petty, payroll, travel, interest, dividend & tax fund
    Cash fund for NCA =  ex. Sinking, preference share, contingent fund (any long
    term investment)

    Things to remember about cash equivalents:

    Cash Equivalents are money making instruments/short investments that are near its maturity
    date (3 months). It must be liquid and there would be no significant change (increase/decrease) to its
    value.

    Ex. Three-month BSP Treasury bill,


    three month time deposit
    three month money market instrument
    commercial paper

    Petty Cash Fund

    T
    he petty cash fund is utilized for everyday expenses, composed of bills & coins to pay for small expenses
    that does not require checks.
    Accounting procedures for Petty Cash

    Bank Reconciliation

    - Is a monthly prepared statement that balances books and bank Records

    Book Reconciling items


    * Credit memos (+) are items that are recorded in the bank but have not yet been recorded in the
    books
    ex. Note receivables collected by bank
    proceeds of a bank loan
    matured deposits transferred by the bank to depositors account

    *Debit memos (-) are items recorded in the books but not yet shown in the depositor’s bank records
    ex. Non-sufficient funds (NSF checks) – checks that aren’t accepted because of lack of funds
    Defective checks – checks with errors (no signature, mutilated countersigned)
    Bank Service charge (BSC) – bank charges for interest, collection and penalty

    Bank Reconciling Items


    * Deposit in Transit (+) are collections that have yet to be reflected in the bank statement but
    already is recorded in the books of the depositor

    * Outstanding checks (-) are checks that have already been recorded by the depositor but not yet
    reflected in their bank statement.

    Error – Can be seen in both Book and Bank, can either be added or deducted depending if it is
    overstated or understated in the book// bank statement

    Proof of Cash
    Proof of Cash is a two date bank reconciliation which is used to find and fix the ending balance of
    the book and bank statement. It balances the book and bank statement’s beginning, receipts,
    disbursements and ending balance of the period.

    Quick formula for DIT and OC

    You might also like