CASH & CASH EQUIVALENTS

 Concept of Cash – Unrestricted and immediately available for use.

 Concept of Cash Equivalents- short term highly liquid investments
that are readily convertible into cash.
 Items considered as cash:
1. Cash on Hand
2. Cash in Bank
3. Cash fund: a. for current- Cash equivalent
b. for noncurrent- Long term investment
 Items considered as Cash Equivalent:
-investments that are bought 3 months before maturity.
 Accounting for Petty Cash Fund
Imprest Fund System Fluctuating Fund System
-fixed amount is reserved,Memo entry -nagalaw ung mismong PCF account
lang gagawin kapag nagamit ung pera kapag nagagamit ung pera sa fund.
sa fund.
BANK RECONCILIATION
 A statement which brings into agreement the cash balance per book and bank.
Incidentally there are three kinds of deposits, bank recon is necessary for
demand deposit only.
 Book reconciling items  Bank reconciling items
1.Credit memo (+) – dagdag sa account na di 1.Deposit in Transit (+)
pa natin recorded. 2.Outstanding checks (-)
2.Debit memo (-) – deduction sa account na di
pa natin recorded.
 Only the book reconciling items require adjusting entries on the book of depositor.
 Errors are reconciling items of party which committed them.
Adjusted balance method
Book Balance xxx Bank Balance xxx
add: credit memo xxx add: Deposit in transit xxx
total xxx total xxx
less: debit memo (xxx) less: outstanding checks (xxx)
adjusted book balance xxx adjusted bank balance xxx