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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: 6

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

Calculating Operating Cash Flows

Williams, Inc., has sales of $13,300, costs of $5,600, depreciation expense of $1,400, and interest expense of $600. If the tax rate is 32 percent, the operating cash flow, or OCF, is?

Sources and Uses of Cash

What are some examples of sources of cash and uses of cash that arise from assets and liabilities.

Detailing Cash Flow From Sale of Family Business

Joe just inherited the family business, and having no desire to run the family business, he ws decided to sell it to an entrepreneur. In exchange for the family business, Joe has been offered an immediate payment of $100,000. Joe will also receive payments of $50,000 in one year, $50,000 in two year , and $75,000 in three years.

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

With Audi's manufacturing company's most recent quarterly income statement and balance sheet determine its Cash Cycle. EOQ: Lilly's Manufacturing needs fastener supplies to manufacture its products. The CFO estimates that the company will need about 200,000 cases next year. The cost of storing cases is about $0.90. The order

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

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

Certainty Equivalent Cash Flow Analysis

A project has an expected risky cash flow of $500, in year 4. The risk-free rate is 4%, the market rate of return is 13%, and the project's bea is 1.2 Calculate the certainty equivalent cash flow for year 4.

Calculating Cash Collections Example

Avril Company makes collections on sales according to the following schedule: 30% in the month of sale 60% in the month following sale 8% in the second month following sale The following sales are expected: Expected Sales January $100,000 February $120,000 March $110,000 Cash collections in March shou

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

Question 1: Your firm, People's Consulting Group, has been asked to consult on a potential preferred stock offering by Brave New World. This 15% preferred stock issue would be sold at its par value of $35 per share. Flotation costs would total $3 per share. Calculate Brave New World's cost of preferred stock. Question 2: Init

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

How do unequal cash flows affect the future value of an investment? Please explain in detail. Please support answer with a minimum of three quality academic and/or industry references. Examples of acceptable references include: The Financial Times The Economist The Wall Street Journal Businessweek Reuters

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 & Corp Evaluation

Consider the following financial data for Rinaldi Ravioli for the most recent year: 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 Short-term debt =

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