Beruflich Dokumente
Kultur Dokumente
Assertions (COVER)
1. Completeness (Cut-off, Proof of Cash)
2. Obligations
3. Valuation (Face Value, Exchange Rate, NRV)
4. Existence (Cash Count, Bank Reconciliation, Interbank Transactions)
5. Rights
Composition of Cash
1. Cash on Hand = includes undeposited currency and coins, undeposited checks (payable to the
entity or bearer), bank drafts and money orders.
2. Cash in Bank = demand deposit, checking account and saving deposit that are NOT legally
restricted.
3. Cash Fund = are set aside for CURRENT purposes such as petty cash fund, payroll fund and
dividend fund.
Initial Valuation
*Face Value
Subsequent Valuation
*General Rule = Face Value
*Except:
a. Foreign Currency
*at Current Exchange Rate
b. Cash in Financial Institutions with Financial Difficulty or in Bankruptcy
*lower of NRV or Face Value
Necessary Disclosures:
1. Temporary Placements of Excess Cash (Predetermined)
2. Cash Compensating Balance
2. Post-dated checks are not yet part of cash receipts or disbursements because before the date
written on the check, the holder of such CANNOT encash it yet.
3. Commercial Paper / Money Market Instrument / Time Deposit / Treasury Bills with 3 months
left until maturity but purchased more than 3 months before maturity are still classified as short-
term investments because the standard says so. The standard does not consider it as "highly
liquid".
4. Undelivered checks are still part of cash and removed from cash disbursements because the
payment of a check requires its delivery to the payee.
5. Returned checks are restored back to its corresponding receivable or payable because there
was no encashment made by the payee.
6. Stale checks are restored back to its corresponding receivable or payable because the
negotiability of the check expired. Banks usually don't honor checks that are not encashed within
a "reasonable time" (normally within six months) after the indicated issue date. If the amount of
the stale check is immaterial, it is normally accounted as miscellaneous income or expense.
7. Legally restricted compensating balances carries the classification of its related loan (either
short-term or long-term investment). It is not classified as cash because you cannot withdraw
such amount immediately.
8. NSF or DAIF checks are debit memos from the bank because no amount was collected from
such check. Therefore, the corresponding receivable of such check is restored.
Bank Reconciliation
1. Book reconciling items:
a. Credit memos
b. Debit memos
c. Book errors