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Cash is the most liquid asset. It is the standard medium of exchange for business transactions (except in bartering transactions). As well, since cash is currency, it is the basis for measuring and accounting for all business transactions and the related items that appear on the financial statements of a business. 

Cash: Cash consists of currency on hand and demand deposits at banks or other institutions and are available for the business's immediate use. Negotiable instruments such as money orders, certified cheques, cashier's cheques, personal cheques and bank drafts are also usually considered to be cash. 

Cash Equivalents: Cash equivalents are "short-term, highly liquid investments that are both (a) readily convertible to known amounts of cash, and (b) so near their maturity date that they present insignificant risk of changes in value because of changes in interest rates" (FAS ASC 305-10-20). That is, cash equivalents are items that can be converted into cash quickly, but with some restrictuion or penalties. Cash equivalents typically include money-market funds, certificates of deposits (CDs), similar types of deposits, and short-term paper. Generally, only investments with original maturity of less than three months are considered to be cash equivalents, and investments in the equity of another firm can never be considered a cash equivalent. 

Cash in Foreign Currencies: Cash in foreign currencies is converted into their U.S. dollar amount at teh exchange rate on the date of the balance sheet. If there are restrictions on the transfer of funds out of a foreign country, this cash will be listed as restricted. If the restrictions are so severe, foreign currency may not qualify for recognition as an asset. 

Restricted Cash: restricted cash is cash on hand that cannot be used by the firm. For example, cash that has been pledged as security or collateral for a liability is considered restricted if the firm would violate the credit agreement by using the cash. The foreign currency case above serves as another example. 

Bank Overdrafts: Bank overdrafts occur when cheques are written for more than the amount of cash that the business had in their bank account. Bank overdrafts are current liabilities. If material, bank overdrafts should be reported as a seperate item. If not material, a bank overdraft can be aggregated with other accounts payable.  


Accounting Series Release No. 148, “Amendments to Regulations S-X and Related Interpretations and Guidelines Regarding the Disclosure of Compensating Balances and Short-Term Borrowing Arrangements"

Categories within Cash

Petty Cash

Postings: 5

Standards that govern the accounting techniques for petty cash are not specifically laid out in U.S. GAAP, but have been developed in accordance with GAAP by practicing accountants in different industries.

Credit Card Sales

Postings: 8

This section looks at issues for accounting for credit card sales transactions.

Cash Controls

Postings: 11

Cash is the asset that is most likely to be stolen or used improperly in business. As a result, 
cash control issues are some of the predominate issues related to internal controls.

Bank Reconciliation

Postings: 29

A bank reconciliation is a schedule that explains any differences between the bank's and the companys records of cash.

Calculating Present Values and Multiple Cash Flows

1. Calculating Present Values: For each of the following compute the present value. Answer in Excel. Present Value____Years____Interest Rate____Future Value ?_______________6__________7%_________$13,827 ?_______________9__________15__________$43,852 ?_______________19_________11__________$725,380 ?_______________23____

Net Working Capital and Operating Cash Flow

The 2009 balance sheet of Maria's Tennis Shop, Inc., showed $3.1 million in long-term debt, $877,400 in the common stock account, and $6.87 million in the additional paid-in surplus account. The 2010 balance sheet showed $3.6 million, $906,300, and $6.99 million in the same three accounts, respectively. The 2010 income statement

Incremental Operating Cash Inflows

Having a difficult time figuring out incremental operating cash inflows for finance class. I figured out step A in assignment but Part B with Incremental Operating Cash Inflows has me lost. If someone could show me how the first problem concerning the new grinder in my excel is calculated I would than be able to figure the rest

Expected Cash Flow After Debt Service

An owner is planning to retire after the coming year. She has to repay a loan $50,000 plus 8 percent interest and must rely on cash flow from operations to do so. Cash flow from operation is uncertain; there is a 70% probability it will equal $65,000, and a 30% probability it will equal $45,000. Assuming a tax rate of 0%, what i

Schedule of Expected Cash Collections

The president of the retailer Prime Products has just approached the company's bank with a request for a $30,000, 90-day loan. The purpose of the loan is to assist the company in acquiring inventories. Because the company has had some difficulty in paying off its loans in the past, the loan officer has asked for a cash budget to

Accumulating Cash Balances

What are the benefits and drawbacks of accumulating cash balances rather than paying dividends? What effects does dividend policy have on this type of decision?

Case Study questions on cash flow of several companies

See attached document for case study data needed for the two questions below: b) Comment on the data reviewed for each firm. Need to see at least 4 points on each company. c) Do any of these firms appear to have a cash flow problem? Comment. You may not see any troubles that warrant alarm, but you still should choose a com

Preferred Stock and Cash Discounts

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Pay Cash for an Asset

Consider the balance sheet of Wilkes Industries as shown below. Because Wilkes has $800,000 of retained earnings, the company would be able to pay cash to buy an asset with a cost of $200,000. Cash $50,000 Accounts payable $100,000 Inventory $200,000 Accruals $100,000 Accounts receivable $250,000 Total CL $200,000

How do unequal cash flows affect the future value of an investment?

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Annual Operating Cash Flow

Answer the following two scenarios: Scenario One: A 5-year project is expected to generate revenues of $94800, variable costs of $35200, and fixed costs of $14600. The annual depreciation is $5000 and the tax rate is 33 percent. What is the annual operating cash flow? Answer $18,075 $32,980 $19,700 $31,800 $3

Cash dividend

Calculate the cash dividends required to be paid for each of the following preferred stock issues: (a) The semiannual dividend on 9% cumulative preferred, $62 par value, 6,500 shares authorized, issued, and outstanding. Semi-annual dividend $ ________ (b) The annual dividend on $3.25 cumulative preferred, 50,0

Royal Tees, Inc: What was the cash flow generated?

For the recently completed fiscal year, Royal Tees Inc. produced a net income of $22,500, had a depreciation expense of $12,500, total cost of goods sold were $24,250, and paid taxes of $2,500. The cash flow generated was?

P&G: Net USD cash flow amount; cost of acquiring one US dollar

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Huntington Industries Cash Flows: Sunk Cost or Opportunity Cost

Huntington Industries is developing the relevant cash flows associated with the proposed replacement of an existing machine tool with a new, technologically advanced one. Given the following costs related to the proposed project, explain whether each would be treated as a sunk cost or an opportunity cost in developing the releva

Calculating cash flow: XYZ Company

The balance sheet and income statement for XYZ Company are presented along with some additional information about the accounts. Answer the following questions concerning cash flows for the period. a All accounts receivable and accounts payable are related to trade merchandise. Accounts payable are recorded net a

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Elmdale Enterprises is deciding whether to expand its production facilities. Although long term cash flows are difficult to estimate, management has projected the following cash flows for the first two year ( in millions of dollars):

3 questions on cash-to-cash cycle for McGhee Corporation

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Determining Relevant Cash Flows Time Line

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Calculating Net Credit Position

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Present value of cash returns

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Free Cash Flow - Marcus Corporation

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Lessee Analysis

From the lessee viewpoint, the riskiness of the cash flows, with the possible exception of the residual value, is about the same as the riskiness of the lessee's Answer a. equity cash flows b. capital budgeting project cash flows c. debt cash flows d. pension fund cash flows e. sales