西方财务会计5.pptVIP

CHAPTER 5 CASH AND ITS CONTROL Introduction(cont.) Cash is one of financial assets. Financial assets include cash,short-term investments and receivables. Financial assets are shown in the balance sheet at their current values. Current value is measured differently for each type of financial asset. Current value The current value of cash is simply its face amount. The current value of short-term investments (marketable securities) is current market value. (represents an exception to the cost principle) The current value of accounts receivable is Net realizable value. Introduction(cont.)key words:(textbook) adequate supply of cash to make variety payments avoid cash shortages during business expansions otherwise the business has risks of insolvent and bankruptcy. avoids keeping excessive amounts on hand or in banks because cash is an unproductive asset unless invested. Why should a business control cash?(summary of textbook) To ensure that sufficient cash is available when needed and that too much cash is not idle, managers must plan and control carefully the cash needs of the business. In addition, because cash is universally desirable, a good business must maintain careful control over its cash to ensure that it is not lost through fraud or embezzlement. Definition of Cash(cont.) Cash consists of demand deposits, currency, coins, money orders, and checks awaiting deposit. Demand deposits are bank checking accounts. Saving accounts are called time deposits. Time deposits are usually considered cash although they are in reality temporary investments. Definition of Cash(cont.) Things that are sometimes mistakenly viewed as cash but that are not cash include postage stamps, postdated checks, checks returned by the bank for lack of sufficient funds, and IOUs of employees and officers for small amounts borrowed from the company. Cash Equivalents Combined with cash account in the B/S. Cash equivalents include some very liquid short-term investments Cash eq