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Intermediate Accounting Cash and Cash Equivalents Cheat Sheet (DRAFT) by

References: The Intermediate Accounting Series Vol. 1 2019 Edition by Robles and Empleo

This is a draft cheat sheet. It is a work in progress and is not finished yet.

CASH

Accepted by the bank or other financial instit­ution for deposit at face value.
Charac­ter­istics:
Unrest­ricted
can be withdrawn immedi­ately
Immedi­ately available for use in the current operations
current obliga­tions, operating expenses, or acquis­ition of current assets

TIMING VS INTENTION

When using cash to buy an asset
the intention matters.
E.g., When cash is RESTRICTED for purchase of building (PPE) within 12 months after the balance sheet date, it is still not part of cash because it is used to purchase a non-cu­rrent asset.
When using cash to pay for liabil­ities
timing matters.

CASH EQUIVA­LENTS

Short term and highly liquid invest­ments that are readily conver­tible to cash.
Near maturity
usually 3 months or less from date of acquis­ition of the instru­ment, not the date on the face of the instrument

PRESEN­TATION AND MEASUR­EMENT OF CASH

Cash is generally measured at face value, which is its fair value.
Foreign currency
cash at the exchange rate at the end of the reporting period.
Cash in closed banks/­fin­ancial diffic­ulty/in bankruptcy
not cash; reclas­sified as receivable and written down to its recove­rable amount.
Post-dated checks, DAIF/DAUD, NSF, and IOUs
not cash; receiv­able.
Postage stamps and advances
not cash; prepaid expenses
Bank overdraft
if there is a right of offset, deduct from another bank and report net positive amount as cash.
Undeli­vered or unreleased checks
cash
Company’s postdated check
cash
Compen­sating balances
cash if unrest­ricted.
Cash set aside for long-term purpose
not cash; reported under the non-cu­rrent assets.