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meet the definition of a cash equivalent. 2.4. Changes in liquidity and risk The definition of cash equivalents makes reference to them being both highly liquid and subject to an insignificant risk of changes in value. IAS 7 does not include any specific requirement to revisit either of these criteria after the initial recognition of a cash ...
- 2.2 CaSh and CaSh equIvalentS
- 2.2.1 Bank Reconciliation
- 2.2.2 Bank Overdraft
- 2.2.2.1 Balance Sheet Treatment of Bank Overdraft
- 2.2.2.2 Bank Overdraft and Statement of Cash Flows
- 2.2.3 Petty Cash
- 2.4 aCCOuntInG FOr FInanCIal InStruMentS
- 2.6 aCCOuntInG FOr hedGInG
Cash and cash equivalents is an asset that appears on the statement of finan-cial position of a business and includes currency (coins and banknotes) held by a business (in hand and in bank accounts) and cash equivalents. Cash is a medium of exchange, a store of value and a unit of account and a business needs to have sufficient cash in order to be ...
company’s cash balance at bank and its cash balance according to its accounting records usually do not match. This is due to the fact that, at any particular date, checks may be outstanding, deposits may be in transit to the bank, errors may have occurred, etc. Therefore companies have to carry out bank reconciliation process which prepares a state...
When a business’ bank account has a negative balance, it is said to be running a bank overdraft (more precisely an actual bank overdraft). It is a form of financing in which the bank honors presented checks even when there is no balance in the business account which results in nega-tive balance in the bank account. There is a special type of bank o...
When the bank has a right to offset the overdraft balance with another bank account of the business, the overdraft is netted off against the other bank accounts maintained with the same bank and the net bank balance is shown as the balance of cash at bank. When the bank has no such right to offset, the overdraft is reported as a liability and when ...
For the purpose of statement of cash flows, under US GAAP any changes in bank overdrafts for a period are appropriately reported as cash flows from financing activities. Under IFRS, however, bank overdraft is treated as part of cash and cash equivalents and movement in bank overdraft is not reported any-where in the statement of cash flows.
Petty cash fund is a relatively small amount of cash that businesses keep on hand for the purpose of small transactions such as providing change to customers, postage expenses, highway tolls. In such transactions, the use of checks is time consuming, costly, or illogical. Usually, a custodian is appointed to administer the petty cash and it is his/...
The financial reporting rules for financial instruments determine whether a particular type of instrument should be recorded at historical cost or at fair value. Historical cost is a measure of value based on the nominal or original cost at the time of acquisition, while fair value is a measure of value based on current market prices at the financi...
The objective of hedge treatment for financial reporting purposes is a proper matching of the timing of gain or loss recognition on a derivative instrument used for hedging purposes with the income or expense rec-ognition related to the item being hedged.12 For financial reporting pur-poses, the hedging instrument and the underlying asset are both ...
- Felix I. Lessambo
- 2018
Cash and Cash equivalents.pdf - Free download as PDF File (.pdf), Text File (.txt) or read online for free. Cash and cash equivalents include highly liquid assets that are readily convertible to cash, such as coins, bills, checks, money orders, and certain investments with original maturities of 3 months or less such as treasury bills and certificates of deposit.
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This document discusses cash and cash equivalents. It defines cash as a financial asset that is readily available to use as needed, such as cash on hand or in bank accounts without restrictions. Cash equivalents are short-term, highly liquid investments that can be converted to cash with little risk of change in value, such as commercial paper purchased close to maturity. The document provides ...
Chapter 1 Cash and Cash Equivalents - Free download as Word Doc (.doc / .docx), PDF File (.pdf), Text File (.txt) or read online for free. Cash and cash equivalents refers to currency, coins, and other highly liquid investments that are readily convertible to known amounts of cash and with insignificant risk of changes in value.
financial statements. A deposit of cash with a bank or similar financial institution is a financial asset because it represents the contractual right of the depositor to obtain cash from the institution or to draw a cheque or similar instrument against the balance in favour of a creditor in payment of a financial liability.’
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• Financial assets at fair value through profit or loss. Note: IFRS 9 does not contain the classification for available-for-sale financial assets. Carrying amount is the amount at which an asset is presented in the statement of financial position. Cash refers to cash on hand and demand deposits with banks or other financial institutions.
