Asset - control

What is an asset?
- It is something that has value and is in possession of an economic entity such as a
business.

2 Types of Asset
- Current
- These are the short-term assets of the company that are ready for use such as cash,
inventory, or accounts receivable.
- Non-current
- These are long-term assets that have a useful life of more than a year. Some
examples are investments, real estate, or equipment.

How the Statement of Financial Position arranged

- Assets are written first, followed by liabilities then equity. In balancing the Statement of
the Financial Position, the total of the assets should be equal to the total of both the
liabilities and equity. This is in reference to the basic accounting equation wherein
liabilities plus equity equals assets.

How do you know if you own an asset?

- If what you own adds financial value then you owe assets. Technically, this means that
your balance for your assets should be in debit to consider it as yours.

What is PAS 1
- PAS 1 focuses on the presentation of financial statements. It provides guidelines, basis,
and requirements in preparing the financial statement.

What is cash
- Cash in accounting includes money and other financial instruments that are accepted in
the bank or other financial institutions

Standards for cash

- An important criteria for an asset is that it should be unrestricted and readily available.

Why cash is a current asset

- Cash is liquid and readily available on hand which is why it is a current asset. It can
easily be used when needed even for purchases of other assets.

What are cash equivalents

 - These are short term highly liquid investments that are readily convertible to cash. It is
also nearing its maturity that it presents insignificant risk of changes in value.

Possible that cash has interest

How we measure cash

- Cash is measured at face value. Meaning the value is as stated in the item.

Cash in foreign currency

- When cash is used as foreign currency it should be translated to PHP using the exchange
rate of the reporting period.

Bank overdraft
- This occurs when the bank accounts a credit balance which results from the issuance of
cheeks in excess of the deposit.

Is bank overdraft always a current liability?

- Yes it is classified a current liability as it results from acquiring credit balance in a bank
account because of a check

Classification of bank overdraft

- Current Assets and current liability

Materiality concept
- Materiality concept in accounting refers to the concept that all the material items should
be reported properly in the financial statements

Compensating balance
- It is the balance that should be maintained in a checking or demand deposit account
balance because of a borrowing arrangement with a bank.

Classification of compensating balance

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Undelivered check
- These are checks that are unreleased to the payee before the end of the reporting date.

Adjusting entries for undelivered check

- Cash debit then accounts payable credit

Post Dated check

 - Postdated checks are checks that are given to the payee before the reporting dates.

Adjusting entries for post dated check

- Cash for debit and accounts payable for credit

Stale check
- It is a check not encashed by the payee for a long time. According to bank practices, a
check is considered stale if it is not encashed within 6 months of issuance.

Adjusting entries for stale check

- If it’s immaterial then the debit should be cash while the credit should be miscellaneous
income
- If it’s material and liability is expected then it should be debited as cash and credited as
accounts payable.

Ante dated check