Professional Documents
Culture Documents
Cash includes money and any other negotiable instrument that is payable in money and acceptable by the bank for deposit and immediate credit. Included in cash: Coins and bills in legal tender by BSP Checks (subject to certain conditions) Bank drafts Money orders Types of checks: Post-dated checks (checks dated on future date) not part of cash and cash equivalents because they are not yet accepted by the bank for deposit and immediate encashment. Not sufficient fund (NSF) checks not part of cash and cash equivalents because the check has insufficient balance not enough for the amount written in the check. Certified checks part of cash and cash equivalents because it is certified and insured by the bank to have sufficiency of fund backed in the check. Examples of certified checks include: o Managers check certified by the manager of the bank o Cashiers check certified by the teller or cashier of the bank o Travelers check certified for travel purposes of the depositor Antedated checks (checks dated on past date) part of cash and cash equivalents provided that they are to be encashed or deposited to the bank six months following the date of the check. Stale checks (checks long outstanding) not part of cash and cash equivalents because it is deemed to be expired. Checks must be deposited or encashed six months following the date of the check. Example Analysis of a Check The date of the check is on October 15, 2011 and has an amount of P15,000. The check is not certified by the bank. Therefore: Before October 15, 2011, the check is post-dated and the maker should have at least P15,000 in his account. On October 15, 2011, if the maker has failed to have at least P15,000 in his account, the check would bounce or marked as NSF check. Once the check is deposited to the bank, the drawer will receive a notice of DAIF (drawn against insufficient funds) After October 15, 2011, assuming the check has sufficient funds, it will be an antedated check. On April 15, 2012 (six months after the check date), assuming the check has not been deposited nor encashed, it is deemed as expired and it will become a stale check.
Unrestricted cash PAS 1 (Presentation of Financial Statements) provides that an entity shall classify an asset as current when the asset is cash or a cash equivalent unless it is restricted from being exchanged or used
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Post-dated checks delivered checks that is sent to payees but has a date subsequent in the reporting period; it is still cash of the company. Stale checks checks released by the company that has been expired Pro-forma Entry Cash Miscellaneous income # Cash Accounts payable xxx xxx (if immaterial) xxx xxx (if material)
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Issues in cash: Window dressing opening the accounts even after the reporting period Lapping practice used for concealing cash shortage, where it consists of misappropriating collections in customers. Kitting practice used for concealing cash shortage through bank reconciliation. Accounting for cash shortage/overage Pro-forma entries for shortage: Cash short or over xxx Cash xxx Discovery of shortage # Due from cashier xxx Cash short or over xxx Assuming cashier is responsible for shortage #
4. Adjustment of expenses at the end of accounting period Imprest: Expenses xxx Petty cash fund xxx Fluctating: No entry 5. Increase (decrease) of PCF Imprest & Fluctating Petty cash fund Cash in bank # Cash in bank Petty cash fund
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