VILLAMIL, ROSELLE MANALOTO

Integrated Review Part 1

Bachelor of Science in Accountancy
Tarlac Christian College
Academic Year 2020 - 2021
 CASH
Legal tender, currency or coins, that can be used to exchange goods, debt, or services.
Sometimes it also includes the value of assets that can be easily converted
into cash immediately, as reported by a company.

Cash is bills, coins, bank balances, money orders, and checks. Cash is used to acquire
goods and services or to eliminate obligations. Items that do not fall within the
definition of cash are post-dated checks and notes receivable. Most forms of cash are
electronic, rather than bills and coins, since cash balances can be stated in the
computer records for investment accounts.
Cash is listed first in the balance sheet, since the reporting sequence is in order by
liquidity, and cash is the most liquid of all assets. A business is more likely to
retain a large amount of cash on hand if it routinely deals with cash transactions (such
as a pawn shop), and is less likely to retain much cash if it has an excellent cash
forecasting system and can therefore invest in more illiquid but higher yielding
investments with confidence.
Cash is assumed to be stated at its fair value at all times.
CASH ON HAND - is the total amount of any accessible cash.
According to "Entrepreneur" magazine, it refers to any
available cash regardless of whether it is in your pocket or your
bank account. Investments that you can convert to cash in 90 days or
less are typically included when calculating your cash on hand.

CASH IN BANK - Are cash maintained in the financial

institution which are usually the banks. A maintaining balance is
made for the opening of the bank account. It is in the form of
Savings account and Current accounts and also Special savings
deposit.

CASH FUND - Cash funds tend to be the safest form of

investment. They invest in cash deposits, like a bank account, with
a specified level of interest. Cash funds will suit investors
looking for low-risk investment options.
 IS CASH AN ASSET?
Simply stated, assets represent value of ownership that can be
converted into cash (although cash itself is also considered
an asset). The balance sheet of a firm records the monetary value of
the assets owned by that firm. It covers money and other valuables
belonging to an individual or to a business.
 THREE TYPES OF CASH
•Operating Cash - cash generated by the operation of your business
showing how well management converts profits into cash.

•Financing Cash - cash input from shareholders or borrowed/repaid to

lenders.

•Investing Cash - cash outgo or income from buying or selling assets.

 CASH EQUIVALENTS
Cash equivalents are the total value of cash on hand that includes
items that are similar to cash; cash and cash equivalents must be
current assets. A company's combined cash or cash equivalents is always
shown on the top line of the balance sheet since these assets are the
most liquid assets.

Cash equivalents are investments that can be readily converted to cash.

Common examples of cash equivalents include commercial paper, treasury
bills, short term government bonds, marketable securities, and money
market holdings.
Gourami Company reported petty cash fun which comprised the following:

Coins and currency 3,300

Paid vouchers:
Transportation 600
Gasoline 400
Office Supplies 500
Postage stamps 300
Due from employees 1,200 3,000

Manager’s check returned by bank marked NSF 1,000

Check drawn by the entity to the order of petty cash custodian 2,700

WHAT IS THE CORRECT AMOUNT OF PETTY CASH FUND FOR STATEMENT PRESENTATION PURPOSES?

Coins and currency 3,300

Check drawn by the entity to the order of petty cash custodian 2,700
Correct amount of petty cash 6,000

*The check drawn by the entity to the order of the petty cash custodian
is actually a replenishment check and therefore part of cash.
Kier Company reported cash account per ledger on December 31, 2020 at P4,700,000 which
consisted of the following:

Petty cash fund 20,000

Undeposited receipts, including a postdated customer check for 100,000 1,500,000
Cash in bank per bank statement, with a check for 200, 000
still outstanding 2,500,000
Deposit in bank closed by BSP 500,000
Vouchers paid out of collections, not yet recorded 150,000
IOUs signed by employees, taken from collection 30,000
4,700,000

What amount should be reported as cash on December 31, 2020?

Petty cash fund 20,000

Undeposited receipts (1,500,000 – 100,000) 1,400,000
Cash in bank (2,500,000-200,000) 2,300,000
CASH – 12/31/2020   3,720,000
On December 31, 2020, Mamsi Company had the following cash balances:

Cash in bank 1,800,000

PCF – all funds were reimbursed on 12/31/2016 50,000
Time deposit due February 1, 2017 250,000

Cash in bank included P600,000 of compensating balance against short-term

borrowing arrangement on December 31, 2020. The compensating balance is legally
restricted as to withdrawal.

On December 31, 2020, what totak amount should be reported as cash and cash
equivalents?

Cash in bank (1,800,000 – 600,000) 1,200,000

PCF 50,000
Time deposit 250,000
TOTAL CASH 1,500,000
FTA Company had the following account balances on December 31, 2020:

Cash in bank 2,250,000

Cash on hand 125,000
Cash restricted for addition to plant
and expected to be disbursed in 2017 1,600,000

Cash in bank included P600,000 of compensating balance against short-term

borrowing arrangement. The compensating balance is not legally restricted as to
withdrawal.

On December 31, 2020, what total cash should be reported under current assets?

Cash in bank 2,250,000

Cash on hand 125,000
Total cash 2,375,000