Cash and Cash Equivalents

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Errors

Can be happen despite the internal control procedures established by the bank and the company.

Credit

Cash Over

Debit

Cash Short

Safe guarding of cash

Cash control system are the methods and procedure used to ensure...

Internal audits at irregular intervals

Cash count conducted by the internal control department are made without advance notice to the cash custodian. Surprise internal audit.

General Checking Account

Cash is deposited in and disbursed from this account as all transactions are cycled through it.

Fair value

Cash valuation and also called face value

Debit memo

Charges to the company's or depositor's account made directly by the bank such as returned checks, bank service charge, charge for the cost of check booklets and payment of bank loans.

Postdated check

Check drawn, recorded and already given to the payee but it bears a date subsequent to the end of reporting period.

NSF/DAIF/DAUD

Check that cannot be covered by the funds in the debtor's bank account. It should be reported as receivable rather than cash.

Add Book

Credit memo

Bank statement

A bank's report on the depositor's beginning and ending cash balance reported on the bank statement.

Stale check

A check is not encashed by the payee in the relatively long time — 6 months.

Non-current asset

A compensating balance is recorded at this account title if it is restricted and related to borrowing of non-current assets.

Lapping

A deficiency in cash control that may occur when the cashier performs the bookkeeping function

Bank reconciliation

A report that explains the difference between the book balance of cash and cash balance reported on the bank statement.

Voucher system

A system that provides for the control of purchases and cash disbursements. Business documents are used to prepare such in support of all payments by check.

Financial Instrument

Any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Discontinued Operations

Assets are reported at _________ if it will be abandoned as is a major line of business or geographical area of operations. Reported at the date that they are actually abandoned.

Cash advances to employees

Assumed to be collectible to the employees or deductible from their salaries.

Less Book

Bank service charge and NSF check

Less Book

Debit memo

Add Bank

Deposit in transit

Outstanding check

Depositor checks which have been processed by the bank but have not yet been recorded by the depositor

Credit memos

Deposits or credits made directly by the bank to the depositor's account such as notes collected by the bank in favor of the depositor, proceeds or the bank loan and interest earned on the depositor's account.

Voucher system

Internal control measure to control major company fund disbursements

Cash short and over

Is a nominal account that is debited for shortage and credited for overages in the petty cash fund.

Lapping

It consists of misappropriating a collection from one customer and concealing this defalcation when collection is made from another customer.

Right of offset

It gives the right to offset the bank overdraft against a positive balance in another bank account in the same bank.

Cash in Bank

It includes demand deposits/ unrestricted deposits that can be withdrawn upon demand in checking and savings account.

Economic resource

It is a right that has the potential to produce economic benefits embodied in any of the following ways (a) used singly or with other assets in the production of revenue; (b) used to acquire other assets, or settle a liability, or distribute to the enterprise owners.

Bank draft

It is a written order addressed to the bank to pay an amount of money to the order of the maker.

Working funds

It is composed of petty cash fund, change fund, payroll fund, dividend fund, etc.

Compensating Balances

It is the cash amount that are not immediately accessible by the owner and maintained as a minimum amount of cash on deposit pursuant to borrowing arrangements with lender.

Window Dressing

It is the practice of opening the books of accounts beyond the close of the accounting period for the purpose of showing a better financial position and performance.

Kiting

It is the transfer of cash from one bank to another bank. It usually employed at the end of the month. It occurs when a check is drawn against the first bank and depositing the same check in a second bank to cover the shortage in the latter bank.

Cash in Close Banks

Known as cash in banks having financial difficulty or in bankruptcy.

Money

Legal tender. Acceptable by bank and other financial institutions for deposit at face value.

Cash

Negotiable instruments that is payable in 'currency and coins' and acceptable by the bank for deposit and immediate credit.

Segregation of duties

No one person should be in complete control of a transaction. This prevents simultaneous misappropriation and manipulation of accounting records to cover up stolen cash.

Add Book

Notes collected and interest income

Undelivered Check

One that us merely drawn and recorded but not given to the payee before the end of reporting period.

Less Bank

Outstanding Check

Fluctuating fund system

Petty cash expenses are immediately recorded. The amount of replenishment may be equal to, more or less than, the petty cash disbursement.

Imprest fund system

Petty cash expenses are recorded upon replenishment. The amount of the replenishment is normally equal to the petty cash disbursement.

Cash Equivalents

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 rates. Matures normally three months or less from the date of acquisition.

Short term investment

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 rates. Matures normally within 12 months from the date of acquisition.

IFRS 9

Standard for Financial Instruments

Money

Standard medium of exchange in business transactions. Composed of currency and coins which are in circulation.

True

T/F Adjustments entry are only for book reconciling items

True

T/F Petty cash fund is reimbursed just prior to the year end and an adjusting entry is made to avoid the overstatement of cash and the understatement of expenses

True

T/F Petty cash system is designed to pay small miscellaneous expenses

False

T/F Requiring disbursements to be done in cash from daily receipts prior to making bank deposits to minimize handling of cash is an effective control of cash disbursement

False

T/F The petty cash account is debited when the fund is replenished.

Compensating balance

The portion of any demand deposit, time deposit, or certificate of deposit maintained by an entity which constitutes support for existing borrowing arrangements of the entity with a lending institution

Demand deposits

There are unrestricted funds deposited in a bank that can be withdrawn upon demand such as checking and savings accounts.

Bank overdraft

Those that cannot be offset against another account is reported as liability. It occurs when a depositor has written checks for a sum greater than the amount in the depository's bank account resulting in the credit balance of bank account.

Customer

To whom is the postdated check from if it is reported as receivables rather than cash?

Company

To whom is the postdated check from if it is reverted to cash and corresponding liability is considered?

Cash on Hand

Undeposited cash collections such as bills and coins, customer's check, traveler's check, manager's check, bank drafts, money orders, etc.

Prepaid Expenses

Unused postage stamps should be recorded as?

Imprest Bank Account

Used to make a specific amount of cash available for a limited purpose. This act as a clearing account for large volume of checks or for a specific type of checks.

Cash in foreign currency

Valued in the current exchange rate of the reporting period.


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