compensating balance is classified separately as “cash held as compensating balance” under current assets if the related loan is short term, otherwise, it is classified as noncurrent investment 12. In banking practice, checks become stale if not encashed within 6months from the time of issuance 13. if stale check is immaterial, it is simply accounted for as a miscellaneous income. Cash Miscellaneous Income 14. If material and liability is expected to continue, cash is restored and liability is again set up 15. Cash short/over Due from cashier Loss from cash shortage Cash Cash short/over Cash short/over 16. cash short/over account is a temporary account. When we already know the cause of such shortage or overage, we then cancel d cash short/over account and replace it with the “real cause”. 17. Imprest system- system of control of cash which requires that all cash receipts should be deposited intact and all cash disbursement should be made by means of check. 18. In imprest system, payment of expenses requires no formal entries. Petty cashier generally requires a signed petty cash voucher for such payments and prepares memo entry in the petty cash journal. 19. Petty cash disbursement should be replenished only by means of check and not from undeposited collection 20. If not replenished, the entry is to state the correct cash fund is:
FINANCIAL ACCOUNTING VOL1 SUMMARY _VALIX jkycpa expenses petty cash fund 21. Under fluctuating fund system, checks drawn to replenish the fund do not necessarily equal the petty cash disbursement. Expenses are immediately recorded and PCF fluctuates from to time. Accounts Receivable 1. Account receivable is an open account not supported by a promissory note. Also known as trade debtors 2. advances to affiliates are usually treated as a long-term investment 3. Creditors’ accounts with debit balances are classified as current assets. 4. Special deposits on contract bids normally are classified as other noncurrent assets 5. Financial assets shall be recognized initially at fair value plus transaction costs that are directly attributable to the acquisition. Fair value is usually the transaction price , fair value of the consideration given 6. AR is subsequently measured at net realizable value or estimated recoverable amount 7. assets shall not be carried at above their recoverable amount 8. freight collect means freight charge on the goods shipped is not yet paid. Buyer pays for it 9. freight prepaid is already paid by the seller 10. AR 100,000 Freight-out 5,000 Sales 100,000 Allow.for freight charge 5,000 Cash 93,000 Sales discount 2,000 Allowance for freight charge 5,000 Accounts receivable 100,000 11. Sales return Allowance for sales return 12. Net method(beyond the discount period): Cash 100,000 AR 95,000 Sales discount forfeited(income) 5,000 13. Allowance method conforms with matching principle. AR is properly measured at NRV 14. Reversal in Direct write-off: AR Cash or if discovered in subsequent year: Cash Bad debts AR Miscellaneous Income 15. Correction of excessive allowance: Allowance for DA 30T Doubtful accounts 20T
You've reached the end of your free preview.
Want to read all 41 pages?
- Fall '17
- Balance Sheet, Generally Accepted Accounting Principles, VOL1 SUMMARY _VALIX, ACCOUNTING VOL1 SUMMARY, FINANCIAL ACCOUNTING VOL1