Professional Documents
Culture Documents
CASH
- includes money and any other negotiable instrument that is
payable in money and acceptable by the bank for deposit and
immediate credit.
- must be unrestricted in use or must be readily available in the
payment of current obligations and not be subject to any
restrictions, contractual or otherwise.
CASH ITEMS:
a. CASH ON HAND undeposited cash collections and other
cash items (Customers, cashiers, managers and travelers
check, bank drafts and money order)
b. CASH IN BANK includes demand deposit or checking
account and saving deposit which are unrestricted as to
withdrawal
c. CASH FUND set aside for current purposes (Petty cash,
payroll, and dividend fund)
CASH EQUIVALENTS
- Short-term and highly liquid investments that are readily
convertible into cash and presents insignificant risk of changes
of value due to changes in interest rates.
- Only highly liquid investments that are acquired 3 mos. before
maturity
(Commercial paper, Marketable securities, Money market funds,
Short-term government bonds and Treasury bills)
BANK OVERDRAFT
When cash in bank account has credit balance resulting from
the issuance of checks in excess of the deposits.
classified as CURRENT LIABILITY and should not be offset
against other bank accounts with debit balances. (Exception is
when not material)
MEASUREMENT
CASH at Face Value
CASH IN FOREIGN CURRENCY at Current Exchange Rate
CLASSIFICATION OF INVESTMENTS IN TIME DEPOSIT,
MONEY MARKET INSTRUMENTS AND TREASURY BILLS:
a. 3 months or less Cash equivalents
b. More than 3 months bit within 1 year Short-term
financial asset or Temporary Investment
c. More than 1 year Long term investments
*if become due within 1 year, reclassified as Temporary
investment.
FOREIGN CURRENCY
Cash
Cash in bank
4. Adjusting unreplenished expenses
Expenses
Petty cash fund
Note: To be reversed at the beginning of the next
accounting period.
5. Increasing the fund
Petty cash fund
Cash in bank
6. Decreasing the fund
Cash in bank
Petty cash fund
b. Fluctuating fund system checks drawn to replenish the
fund do not necessarily equal the petty cash disbursements.
Journal entry
1. Establishment of the fund
Petty cash fund
Cash in bank
2. Payment of expenses
Expenses
Petty cash fund
3. Replenishment or increase of the fund
Petty cash fund
Cash in bank
Note: At the end of reporting period, no adjustment is
necessary.
4. Decreased of the fund
Cash in bank
Petty cash fund
*BANK RECONCILIATION*
3 KINDS OF BANK DEPOSIT
1. DEMAND DEPOSIT current account or checking account
or commercial deposit where deposits are covered by the
deposits slips and where funds are withdrawable on demand
by drawing checks against the bank.
Note: It is noninterest bearing. Bank reconciliation is
necessary.
2. SAVING DEPOSIT passbook is given and is required when
making deposits and withdrawals (sometimes may require
notice of withdrawal)