Includes coin, currency, bank deposits including checking and savings accounts and negotiable instruments such as money orders, cashiers' checks, personal checks and bank drafts.
are short-term, highly liquid investments that are both
(a) readily convertible to known amounts of cash and (b) so near their maturity that they present insignificant risk of changes in interest rates. If an asset is not cash and is short-term in nature, it should be reported as as a temporary investment.
occur when a company writes a check for more than the amount in the cash account. should be accounted for as accounts payable or, if material, separately disclosed on the balance sheet or in the notes. . .
Management of Cash
(1) cash enters into a great many transactions; (2) cash is the single asset reality convertible into any other type of asset; and (3) neither too much nor too little should be available at any time.
the custodian is given a small amount of currency from which to make small payments (minor office supplies, taxi, postage, etc.). Each time a disbursement is made, the cashier obtains a signed receipt for the payment. When cash in the fund runs low, the cashier submits the signed receipts to the general cashier and a check is prepared to replenish the cash fund. This process is designed to promote control over small cash disbursements which would be awkward to pay by check.
when properly prepared, proves that the cash balance per bank and the cash balance per book are in agreement
Deposits in Transit
Deposits recorded in the cash account in one period but not received by the bank until the next period.
Checks written by the company that have yet to be presented at the bank for collection.
Charges by the bank for services that are deducted from the account by the bank and which the company learns of when it receives the bank statement.
Collections or deposits in the company's account that the company is not aware of until receipt of the bank statement.
Bank or Depositor Errors
Errors made by the company or the bank that must be corrected for the reconciliation to balance.