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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: 28

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

Cash Cycles: Audi

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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

Creating a spread sheet for one year's cash flow

Fluffy Bunnies makes cuddly toys for sale in the USA. All costs and income is in dollars. The company makes 2,000 toys for sale in each month and sells them all for cash payments (no credit sales). Each bunny sells for $6.25 including VAT. Variable costs per item are $3.50 including VAT. Variable costs are paid as they are in

Certainty Equivalent Cash Flow Analysis

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Case Study questions on cash flow of several companies

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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

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 Flow and Corp Evaluation

Consider the following financial data for Rinaldi Ravioli for the most recent year (see attachment): Sales = $100M Labor and material expense = $50M Depreciation = $20M Interest expense = $5M Tax rate = 40% Capital expenditures = $22M Receivables increased by $6M Inventory increased by $1M Payables increased by $3M S

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

P&G is a US based MNC and has operations in Turkey. P&G expects 120,000,000 TRL cash flows in 6 months, however due to significant volatility, cash flows are expected to fluctuate as much as 20%. In other words P&G can get TRL120m, TRL96m or TRL144m depending on the economic conditions. Based on their expectations, P&G treasurer

Huntington Industries Cash Flows: Sunk Cost or Opportunity Cost

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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):

Free Cash Flow and Intrinsic Value of Stock

Based on the information provided, calculate the intrinsic value in 2004 of a share of INV Corp. using the FCFF (free cash flow to the firm ) model. For 2004 the FCFF was $30,000, total debt was $20,000, and there were 12000 shares outstanding. The required rate of return is 9% and the estimated growth rate in FCFF is 6.5%.

Cash-to-cash cycle for McGhee Corporation

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Determining Relevant Cash Flows Time Line

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Cash flows, present value, cash flow streams, investments

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Stock Price, Cash Flow, Opportunity Cost of Capital

1. An analyst knows with certainty that Skipper Inc. will exist for two years and have the following cash flows per share: Year 1 Year 2 Revenue $100 $100 Costs $ 80 $80 Net cash flow $ 20 $ 20 What is the stock price of Skipper Inc. if the opportunity cost of capital is 8 percent?

Cash analysis

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Calculating Net Credit Position

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