In this chapter students will be able to: Describe the current asset classification and its role in financial analysis and control; explain the techniques used to manage, account for, and control cash; define accounts receivable and indicate how the allowance method is used to value accounts receivable on the financial statements. | Practical Issues in Cash and Receivable PART II: Corporate Accounting Concepts and Issues Lecture 08 Identify items considered cash. Indicate how to report cash and related items. Define receivables and identify the different types of receivables. Explain accounting issues related to recognition of accounts receivable. Explain accounting issues related to valuation of accounts receivable. Learning Objectives What is cash? Reporting cash Summary of cash-related items Cash Special Issues Recognition of notes receivable Valuation of notes receivable Cash and Receivables Accounts Receivable Notes Receivable Recognition of accounts receivable Valuation of accounts receivable Fair value option Disposition of accounts and notes receivable Presentation and analysis Most liquid asset Standard medium of exchange Basis for measuring and accounting for all items Current asset Examples: coin, currency, available funds on deposit at the bank, money orders, certified checks, cashier’s checks, . | Practical Issues in Cash and Receivable PART II: Corporate Accounting Concepts and Issues Lecture 08 Identify items considered cash. Indicate how to report cash and related items. Define receivables and identify the different types of receivables. Explain accounting issues related to recognition of accounts receivable. Explain accounting issues related to valuation of accounts receivable. Learning Objectives What is cash? Reporting cash Summary of cash-related items Cash Special Issues Recognition of notes receivable Valuation of notes receivable Cash and Receivables Accounts Receivable Notes Receivable Recognition of accounts receivable Valuation of accounts receivable Fair value option Disposition of accounts and notes receivable Presentation and analysis Most liquid asset Standard medium of exchange Basis for measuring and accounting for all items Current asset Examples: coin, currency, available funds on deposit at the bank, money orders, certified checks, cashier’s checks, personal checks, bank drafts and savings accounts. What is Cash? LO 1 Identify items considered cash. Cash Short-term, highly liquid investments that are both Reporting Cash LO 2 Indicate how to report cash and related items. Cash Equivalents readily convertible to cash, and so near their maturity that they present insignificant risk of changes in interest rates. Examples: Treasury bills, Commercial paper, and Money market funds. Companies segregate restricted cash from “regular” cash. Examples, restricted for: (1) plant expansion, (2) retirement of long-term debt, and (3) compensating balances. Reporting Cash LO 2 Restricted Cash Illustration 7-1 Company writes a check for more than the amount in its cash account. Reporting Cash LO 2 Indicate how to report cash and related items. Bank Overdrafts Generally reported as a current liability. Offset against other cash accounts only when accounts are with the same bank. Summary of Cash-Related Items LO 2 Illustration 7-2 Internal Control .
