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CASH

CASH. MEMBERS: Ruiz, Anthony Zuniga, Noel Vergeire , Miguel Asturiano , Patrick Alquizar , KM. CASH. Is any item that can be used as medium of exchange and which is acceptable by bank at face value upon deposit.

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CASH

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  1. CASH MEMBERS:Ruiz, AnthonyZuniga, NoelVergeire, MiguelAsturiano, PatrickAlquizar, KM

  2. CASH • Is any item that can be used as medium of exchange and which is acceptable by bank at face value upon deposit. • Cash items on hand or undeposited cash collections and cash items awaiting deposit such as bills and coins, bank drafts, customer’s checks, manager’s checks, and postal money order.

  3. CASH • Peso or foreign currency deposits in bank – savings, checking or money market accounts. • Working funds, petty cash fund, payroll fund, and dividend fund.

  4. NATURE OF CASH • Beginning and end of accounting business cycle and the lifeblood of the business organism. • Most liquid asset.

  5. IMPORTANCE OF CASH • Cash is important because it provides business and individuals with liquidity.

  6. COST OF HOLDING CASH • OPPORTUNITY COST- INTEREST INCOME, THAT COULD BE EARN IN THE NEXT BEST USE, SUCH AS INVESTMENT IN MARKETABLE SECURITIES.

  7. USE OF CASH • FOR TRANSACTIONS- are ones that are settled immediately in Cash. Cash transactions also includes transactions which is made through cheques. Cash transaction may be classified into cash receipts and cash payments. • CASH RECEIPTS-are accounted for by debiting Cash/bank ledger to recognize the increase in the asset. • CASH PAYMENTS-are accounted for by crediting Cash/bank ledger to account for the decrease in the asset.

  8. SOURCE AND USES OF CASH IN A BUSINESS • Operating Activities- also known as working capital. Includes all of the business day to day activities. Includes your receivables, payables etc. • Investing Activities- It is generated internally from non-operating activities. Includes the acquisition of depreciable assets. You use cash when you buy an asset and can provide cash when you sell them. • Financing Activities- Cash to and from external sources. Includes the borrowingsand loans of an entity.

  9. CASH MANAGEMENT • CASH- LITERAL MEANING “CASH ON HAND” - FINANCIAL MANAGERS CALLED IT THE FIRMS HOLDING OF CASH ALONG WITH THEIR MARKETABLE SECURITIES.

  10. CASH MANAGEMENT • CAN BE BROADLY DEFINE TO MEAN OPTIMIZATION OF CASH FLOWS AND INVESTMENT OF EXCESS CASH • IT IS VERY COMPLEX. IN ADDITION, EXCHANGE RATE FLUCTUATIONS CAN AFFECT THE VALUE OF CROSS BORDER CASH TRANSFERS.

  11. CASH MANAGEMENT • CONCERN WITH OPTIMIZING MECHANISM FOR COLLECTING AND DISBURSING CASH. • EXAMPLE: • the more you save, the more you earn, as the interest rates goes up incrementally. You can increase the amount you save at any time by depositing cash or cheques, transfer inward and so on, or reduce the amount in your account by withdrawing cash or transferring money to another of your accounts.

  12. CASH EQUIVALENTS • These are short term and highly liquid investments that are both readily marketable to known amounts of cash and are subject to insignificant risk of change in value. • BangkoSentralngPilipinas treasury bills, commercial papers, and money market instruments with original maturities of three months or less.

  13. Additional information: • The determination of original maturity date starts form the date of acquisition of the instrument and not from the date indicated on the face of the instrument. • Trading equity securities cannot qualify as cash equivalents because these securities do not have maturity dates

  14. Valuation • There is usually no problem on valuation of cash and cash equivalents, since they are generally valued at their face value. • For cash in foreign currency, however, valuation is at the exchange rate at the reporting date of statement of financial position.

  15. Presentation in the Statement of Financial Position • Cash and Cash equivalents are usually presented as the first item among the current assets in the statement of financial position • If the balance sheet is prepared for a special purpose, it is not necessary to classify them to distinguish deposits in various banks or deposits at various locations, cash on hand and undepositedcash. The details should be enclosed on the Notes to Financial Statements.

  16. Basic Characteristics of a Cash Control System • Specifically assigned responsibility for handling cash receipts. • Separation of cash handling and cash recording functions • Daily deposits of all cash received • Voucher system to control cash payments. • Internal audit at irregular intervals • Periodic reconciliation of bank statement balance and cash balance in the company’s accounting records.

  17. Sources: • Financial Accounting and Reporting Theory and Problems 2013 edition by:ROBLES. • http://accounting-simplified.com/accounting-for-cash-transactions.html • http://www.summitservicesinc.com/blog/article/the_3_sources_and_uses_of_cash

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