Chapter 6 Most Liquid Assets

Chapter 6 Most Liquid Assets - C hapter 6 Most Liquid...

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6.1 Cash 6.2 Temporary Financial Investments 6.3 Accts. Receivable Cash= Cash+Cash Equivalents (highly liquid assets readily convertible into cash) Cash is accounted for at face value (Canada & 98% of other countries) Countries with hyper inflation : Cash is accounted for using purchasing power of cash Accounting for Foreign Currencies: Foreign currencies must be reported on financial statements at the exchange rate at the end of the period. All the impact of changes in currency rates is reported as gains/losses E.G Jan 14 Received 1200 euros in revenue. Exchange rate is .75 cents CAD. CAD received 1200/.75= 1600 CAD Cash 1600 Sales revenue 1600 Jan 31 exchange rate is .70 cents CAD CAD on hand 1200/.70=1714 gain of 114 Cash 114 Gain on currency exchange 114 Bank Reconciliation: document that explicitly compares the cash balance of a firm and the firms bank statement to explain all differences between the two. Eg. On Jan 31, balance in cash account of BCA is $7630. The balance on BCAs bank
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This note was uploaded on 09/13/2011 for the course ADM 2340 taught by Professor Perper during the Fall '07 term at University of Ottawa.

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Chapter 6 Most Liquid Assets - C hapter 6 Most Liquid...

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