Cash and Cash Equivalent
Cash and Cash Equivalents
Cash This includes money and other negotiable instrument that is payable in money and acceptable by the bank for deposit and immediate credit. Examples are bills and coins, checks, bank drafts and money orders.
To be included or considered as cash, it must be unrestricted as to use, meaning, it must be readily available for use or payment of current obligations, thus, not subject to contractual or legal restrictions.
The following items are included in “cash”: * Cash on Hand * Cash in Bank * Cash Fund
Cash Equivalents According to PAS 7, cash equivalents are short-term highly liquid investments that are readily convertible into cash so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. In addition, the standard also states that only highly liquid investments acquired three months before maturity can qualify as cash equivalents. Examples are: * Three-month BSP Treasury Bill * Three month time deposit * Three-month money market instruments * BSP Instruments purchased three months prior to maturity * Redeemable preference shares purchased three months prior to maturity
Valuation of Cash * Face value * Current exchange rate if foreign currency * Net realizable value if cash is in bank that is under bankruptcy proceeding
Investment of Excess Cash * If invested with terms of 3 months or less, treated as “cash and cash equivalents” * If invested with terms more than 3 months but not more than 1 year, treated as short term investments classified as other current assets * If invested with terms of more than 1 year, treated as long term investment under non-current assets, however, reclassified as current asset if maturity is within 1 year.
Cash Fund * The classification of a certain cash fund follows the nature of the liability it is created for. * Cash funds created for current obligations are
Cash This includes money and other negotiable instrument that is payable in money and acceptable by the bank for deposit and immediate credit. Examples are bills and coins, checks, bank drafts and money orders.
To be included or considered as cash, it must be unrestricted as to use, meaning, it must be readily available for use or payment of current obligations, thus, not subject to contractual or legal restrictions.
The following items are included in “cash”: * Cash on Hand * Cash in Bank * Cash Fund
Cash Equivalents According to PAS 7, cash equivalents are short-term highly liquid investments that are readily convertible into cash so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. In addition, the standard also states that only highly liquid investments acquired three months before maturity can qualify as cash equivalents. Examples are: * Three-month BSP Treasury Bill * Three month time deposit * Three-month money market instruments * BSP Instruments purchased three months prior to maturity * Redeemable preference shares purchased three months prior to maturity
Valuation of Cash * Face value * Current exchange rate if foreign currency * Net realizable value if cash is in bank that is under bankruptcy proceeding
Investment of Excess Cash * If invested with terms of 3 months or less, treated as “cash and cash equivalents” * If invested with terms more than 3 months but not more than 1 year, treated as short term investments classified as other current assets * If invested with terms of more than 1 year, treated as long term investment under non-current assets, however, reclassified as current asset if maturity is within 1 year.
Cash Fund * The classification of a certain cash fund follows the nature of the liability it is created for. * Cash funds created for current obligations are