Reporting Cash
Cash
consists of coins, currency (paper money), check, money orders, and money on hand or on
deposit in a bank or similar depository
. Companies report cash in two different statements: the
balance sheet and the statement of cash flows
. The balance sheet reports the amount of cash
available at a given point in time. The statement of cash flows shows the sources and uses of
cash during a period of time. The cash flow statement was introduced in Chapters
1
and
2
and
will be discussed in much detail in Chapter
12
. In this section we discuss some important points
regarding the presentation of cash in the balance sheet.
When presented in a balance sheet, cash on hand, cash in banks, and petty cash are often
combined and reported simply as
Cash
.
Because it is the most liquid asset owned by the
company, cash is listed first in the current assets section of the balance sheet.
Cash Equivalents
Many companies use the designation “Cash and cash equivalents” in reporting cash. (See
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- Spring '11
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- Balance Sheet, cash equivalents
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