Cash – money and other negotiable instruments accepted by banks for deposit or immediate credit

- Other negotiable instruments

o Checks
o Bank drafts
o Money orders
- Requirements: it should be unrestricted and ready for use
o Used for operations
o Used for obligations
- Measurement
o Face amount
- Foreign currency
o Translated first to Philippine peso using closing/current exchange rate
- Bank or financial institution declaring bankruptcy
o Measured at lower of face amount and estimated realizable value
o PDIC maximum claim is 500,000 pesos
 Cash becomes claim from insurance (non trade receivables)
 Should be claimed within 6 months
 If silent it is considered as part of other current assets
- Components of cash
o Cash on hand
 Undeposited collections
 Bills and coins
 Other cash items awaiting deposits
 Managers check, travelers check, bank drafts, money orders
o Cash in bank
 Savings account
 Checking account
 Otherwise called current account/demand deposits
o Cash fund
 Money that are being set aside for a certain current purpose
 Current purpose pertains to cash for obligations or current liability
 Examples
 Petty cash fund
 Dividend fund

Cash equivalents

- Short term and highly liquid investments that are readily convertible to cash and so near their
maturity that they present insignificant risk to changes in value because of changes in interest
rate
- Highly liquid
o Acquired within three months before maturity date
o Debt securities
- Equity securities will never be part of cash equivalents due to absence of a maturity date