CASH

DEFINITION
 Includes money and other negotiable instruments payable in money and is
acceptable by the bank for deposit and immediate credit.
 Is equivalent to money – a standard medium of exchange.
 Currency and coins that are circulating are legal tender.

PRESENTATION – cash is a current asset EXCEPT when cash is restricted

for more than 12 months after the end of a reporting period.

MEASUREMENT
 Initially – magkano siya nung una mo siyang makita. Measured @ FV.
 Subsequently – magkano siya paglipas ng panahon. Measured @ FV.
 Estimated recoverable/realizable value/amount – if cash is not
recoverable @ face value.
Cash in foreign currency – must be converted into Philippine peso.
 Valuation/measurement – the current exchange rate.

CASH ITEMS
1. Cash on Hand – undeposited cash collections or cash not in the bank.
 Customer’s check – checks given to you by customers as payment.
 Manager’s check – checks approved by managers. The amount in
the check is automatically deducted from the customer’s account.
 Cashier’s check – checks approved by cashiers. The amount in the
check is automatically deducted from the customer’s account.
 Traveller’s check – checks approved by managers/cashiers. These
are checks carried by traveler when going to another country.
 Bank draft – negotiable instrument where payment is guaranteed
by the issuing bank, itself.
 Money order – purchased by prepaying the amount printed on the
face of the money order with cas/cash equivalent. Ex; GCASH
2. Cash in Bank – cash or cash instruments deposited in bank.
 Checking account – deposited in the bank to be use every day.
 Savings deposit – deposited in the bank to constitute savings.

CHECKS
 a. Undelivered checks – checks not given to the payee before the end
of the reporting period. NO PAYMENT IF NOT DELIVERED.
Cash in bank xxx
Accounts payable xxx
b. Postdated Checks – the date of the check is later than the date it
was given. NO PAYMENT IF NOT YET WITHDRAWN BY THE PAYEE.
Cash in bank xxx
Accounts payable xxx
c. Stale check – checks not encashed within a long time.
If check is misplaced by the payee and is asking for a replacement,
the payor can refuse to discourage these kinds of scenarios.
If the amount is immaterial;
Cash xxx
Miscellaneous Income xxx
If material; (liability is expected to continue)
Cash xxx
Accounts Payable xxx

BANK OVERDRAFT (issuance of check > deposited money)

Cash in the bank has credit balance. Payee can only encash up to the
amount seen at the payor’s bank. Payor can be penalized.
Classified as current liability
Exception;
- if bank and payor has strong relationship
- an entity maintains 2 or more accounts in 1 bank
- if amount is immaterial
3. Cash Fund –
Restriction
- no restriction = cash
- if the restriction is for current operation = cash fund
- if restriction is for long term, it can be;
o NC liability – loans/bonds
o NC asset
- if restriction is for plant expansion fund, it is long term investment
-
 Change fund – panukli lang dapat.
  Tax fund – pambayad ng tax and still part of operation
 Payroll fund – pamabayad ng salari only
 Dividend fund

COMPENSATING BALANCE
Minimum checking/deposit account balance that must be maintained if
the customer has a borrowing agreement with the bank. RESTRICTED.
If restriction is formal = considered as long-term investment. Totoo.
If restriction is informal = considered as cash. Panakot lang.