ACC 321- Exam #2 Book Notes

ACC 321- Exam #2 Book Notes - ACC 321- Chapter 7 Book Notes...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: ACC 321- Chapter 7 Book Notes 28/02/2011 11:56:00 ← Chapter 7- Cash and Receivables ← ← What is Cash? Chart on (P322) • The most liquid of assets, is the standard medium of exchange and the basis for measuring and accounting for all other items. o A current asset (even saving accounts) o Companies treat postdated checks and I.O.Us as receivables, along with travel advances • Cash Equivalents o Short-term, highly liquid investments that are both o a) readily convertibles to known amounts of cash and o b) so near their maturity that they present insignificant risk of changes in interest rates ex) treasury bills, commercial paper, and money market funds o Can be misleading because, auction rate notes that decline in value can also occur with cash equivalents o FASB will only report cash on the Income Statement, and if its not cash and is short-term it is considered a temporary investment o If an item cannot be quickly converted to coin or currency, a company separately classifies it as an investment, receivable, or prepaid expense • Restricted Cash o petty cash, payroll, and dividend funds o separated from regular cash for reporting purposes o classified in either the current assets or in the long-term assets o Compensating Balances- minimum balances required by the SEC that portion any demand deposit maintained by a corporation which constitutes support for existing borrowing arrangements of the corporation with a lending institution o To avoid misleading investors about the amount of cash available to meet recurring obligations, the SEC recommends that companies state separately legally restricted deposits held as compensating balances against short-term borrowing among Cash and Cash Equivalent items in the Current Assets o Long- term borrowing is arranged in the non-current assets in the Investment section • Bank Overdrafts o Occur when a company writes a check for more than the amount in its cash account o Reported in the current liabilities section with accounts payable ← Receivables • Claims held against customers and others for money, goods, or services • Either current (short-term) or non-current (long-term) o Accounts receivables- oral promises of the purchaser to pay for goods and services sold o Notes Receivables- written promises to pay a certain sum of money on a specified future date o Non-trade Receivables- advances to officers, employees, subsidiaries, or deposits paid to cover potential damages o Also, dividends and interest receivables and claims against… o Recognition, valuation, and disposition Recognition of Accounts Receivable...
View Full Document

This note was uploaded on 11/15/2011 for the course ACC 321 taught by Professor Staff during the Spring '08 term at Miami University.

Page1 / 24

ACC 321- Exam #2 Book Notes - ACC 321- Chapter 7 Book Notes...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online