Cash and cash equivalents

1. Cash not just include currency and coins but also those that are acceptable by
bank for deposit or immediate encashment such as checks, bank drafts and
money orders.
2. Cash is measured at face value. Cash in foreign currency is measured at current
exchange rate
3. If the financial institution holding the funds of an entity is in bankruptcy or
financial difficulty, cash should be written down to estimated realizable value if
the amount recoverable is estimated to be lower than face value
4. excess cash should be invested in revenue-earning investment
5. deposits in foreign investment which are subject to foreign exchange restriction,
if material, should be classified separately among noncurrent assets and the
restriction clearly indicated.
6. Details comprising cash and cash equivalents should be disclosed in the notes to
financial statements
7. the credit balance in the cash in bank account results from the issuance of
checks in excess of the deposits—overdraft
8. Overdraft is not permitted in the Philippines
9. if entity maintains two or more accounts in one bank and one account results in
an overdraft, such overdraft can be offset against the other bank account with
debit balance in order to show, cash, net of bank overdraft
10. An overdraft can also be offset against the other bank account if the amount is
immaterial
11. if the deposit is legally restricted because of a formal compensating balance
agreement, the compensating balance is classified separately as “cash held as
compensating balance” under current assets if the related loan is short term,
otherwise, it is classified as noncurrent investment
12. In banking practice, checks become stale if not encashed within 6months from
the time of issuance
13. if stale check is immaterial, it is simply accounted for as a miscellaneous
income.
Cash
Miscellaneous Income
14. If material and liability is expected to continue, cash is restored and liability is
again set up
15. Cash short/over Due from cashier Loss from cash shortage
 Cash Cash short/over Cash short/over
16. cash short/over account is a temporary account. When we already know the
cause of such shortage or overage, we then cancel d cash short/over account and
replace it with the “real cause”.
17. Imprest system- system of control of cash which requires that all cash receipts
should be deposited intact and all cash disbursement should be made by means
of check.
18. In imprest system, payment of expenses requires no formal entries. Petty
cashier generally requires a signed petty cash voucher for such payments and
prepares memo entry in the petty cash journal.
19. Petty cash disbursement should be replenished only by means of check and not
from undeposited collection
20. If not replenished, the entry is to state the correct cash fund is:
expenses
petty cash fund
21. Under fluctuating fund system, checks drawn to replenish the fund do not
necessarily equal the petty cash disbursement. Expenses are immediately
recorded and PCF fluctuates from to time.