1.CashContentCashincludes coins,papermoney,checks,money orders.and money in depositPlaceOn balance sheet, cash islisted first among the currentassets. because it is the most current and liguid of all assetsAmountCash and cash equivalents areaccounted for accordingtothe actual amount ofreceipt and payment6
6 1. Cash ⚫ Content Cash includes coins, paper money, checks, money orders, and money in deposit. ⚫ Place On balance sheet, cash is listed first among the current assets, because it is the most current and liquid of all assets. ⚫ Amount Cash and cash equivalents are accounted for according to the actual amount of receipt and payment
CashandCashEquivalentsCashandCashEquivalents istheamountofmoney the company has in bank accounts, savingsbonds, certificates of deposit, and money marketfunds. It tells you how much money is availabletothebusiness immediately
7 Cash and Cash Equivalents ⚫ Cash and Cash Equivalents is the amount of money the company has in bank accounts, savings bonds, certificates of deposit, and money market funds. It tells you how much money is available to the business immediately
Cashisavital factor intheoperation oabusinesssince manybusiness transaction involve cash Cash is most subject to theft and fraud. So, strictcontrol over cash should be applied in a businessThere are some cases where cash on the balancesheet isn't necessarily a good thingThe moral:Youprobablywon'tbe abletotell if a company is weakbased on cash alone:the amount of debt isfar more8important
8 ⚫ Cash is a vital factor in the operation o a business, since many business transaction involve cash. ⚫ Cash is most subject to theft and fraud. So, strict control over cash should be applied in a business. There are some cases where cash on the balance sheet isn't necessarily a good thing. The moral: You probably won't be able to tell if a company is weak based on cash alone; the amount of debt is far more important
ExampleCingular company conducted the followingtransactions:(1)Invested $500,000 in the business(2)Purchased supplies and equipment for $100,000(3)Performed service for state Corporation andreceived $20,000 a month later.9
9 Example ⚫ Cingular company conducted the following transactions: (1)Invested $500,000 in the business. (2)Purchased supplies and equipment for $100,000. (3)Performed service for state Corporation and received $20,000 a month later
Solution500.000(1) Dr. Cash500,000Cr. Paid-in Capital100,000(2) Dr. Supplies and EquipmentCr. Cash100,00020,000(3)Dr.AccountsReceivable20,000Cr.ServiceRevenue20,000Dr. Cash20,000Cr.Accounts Receivable10
10 Solution ⚫ (1) Dr. Cash 500,000 Cr. Paid-in Capital 500,000 ⚫ (2) Dr. Supplies and Equipment 100,000 Cr. Cash 100,000 ⚫ (3) Dr. Accounts Receivable 20,000 Cr. Service Revenue 20,000 Dr. Cash 20,000 Cr. Accounts Receivable 20,000