CASH AND CASH EQUIVALENT
Cash Cash Equivalents (debt securities)
● Checking account ● Treasury bill/warrants
● Current account ● Money market placement (Silent CE) –
● Savings deposit/account Ex. Commercial papers
● Payroll account ● Time deposit (Silent CE)
● Checkbook balance ● Certificate of deposit
● Undelivered check drawn - add ● Money market funds or savings
● Demand deposit certificates
● Petty cash/Payroll/ Change/ Dividends/
● Redeemable Preference Shares with
Revolving/Travel/ Tax/Interest Fund
mandatory redemption acquired 3
● Traveler’s/Manager’s/Cashier’s/Certified
months before redemption date
/Personal check
● Customer’s check
● Money order
● Compensating balance – if not legally
restricted (if silent)
● NSF – minus (if included)
● Bank draft
● Unreleased check – add back if deducted
● Postdated check issued - add back if
deducted
NOT INCLUDED Petty Cash Fund
● Postdated check received - AR ● Check drawn – order of custodian – add
● Sinking fund – noncurrent ● Manager’s check (NSF) – not included
investment/liability (if silent) ● Check drawn – as salary of custodian -
● Share investment – no maturity (accommodation check) – add
● Compensating balance – if legally ● IOU – not included
restricted – either CA or NCA ● Refundable deposit – not included - CA
● Time deposit in bank closed – NCA
● Postage stamps - not cash but office
● Bank overdraft – if material, CL (netted if
supplies
same bank and included in cash)
● Pension/Contingency/Preferred stock
redemption/Plant expansion/ Insurance
Fund/ Bond sinking fund - noncurrent
investment
● Equity securities – no maturity (except
preferred stock with redemption date)
, ● Travel advances - AR
Bank Reconciliation
Book Balance Bank Balance
● Bank Charges (Debit memo) - bank ● Deposit in Transit – add - Undeposited
services, printing checks, not-sufficient- receipts
funds (NSF) checks, and safe-deposit box ● Outstanding checks – minus
rentals. ● Certified check – not outstanding
● Bank Credits (Credit Memo) - note
collection, interest earned on interest-
bearing checking accounts
LOANS AND RECEIVABLES
Accounts Receivable
● Recovery of accounts written off: no effect on AR balance
● Amortized cost = Net realizable value (AR-Sales Discount-Doubtful Accounts-Write off)
● Unassigned or assigned receivables: both included
● Factored AR: not included
● Recoveries on AR written off if not included on cash received: add only to Allowance for
Doubtful Accounts (ADA) and not to NRV
● Only bad debt expense affects working capital and not write off
Aging method/Percentage of AR: amount computed = required ending ADA
Percentage of Sales: amount computed = bad debts expense
COGS + Gross margin on sales = Gross Sales
● Security deposit: non current receivable
● Unsold goods on consignment: inventory
Assignment of AR
● Net Proceeds = Notes payable - finance fee
● Equity in assigned AR (Disclosed only) = AR assigned - Notes Payable
Factoring of AR
Cash Cash Equivalents (debt securities)
● Checking account ● Treasury bill/warrants
● Current account ● Money market placement (Silent CE) –
● Savings deposit/account Ex. Commercial papers
● Payroll account ● Time deposit (Silent CE)
● Checkbook balance ● Certificate of deposit
● Undelivered check drawn - add ● Money market funds or savings
● Demand deposit certificates
● Petty cash/Payroll/ Change/ Dividends/
● Redeemable Preference Shares with
Revolving/Travel/ Tax/Interest Fund
mandatory redemption acquired 3
● Traveler’s/Manager’s/Cashier’s/Certified
months before redemption date
/Personal check
● Customer’s check
● Money order
● Compensating balance – if not legally
restricted (if silent)
● NSF – minus (if included)
● Bank draft
● Unreleased check – add back if deducted
● Postdated check issued - add back if
deducted
NOT INCLUDED Petty Cash Fund
● Postdated check received - AR ● Check drawn – order of custodian – add
● Sinking fund – noncurrent ● Manager’s check (NSF) – not included
investment/liability (if silent) ● Check drawn – as salary of custodian -
● Share investment – no maturity (accommodation check) – add
● Compensating balance – if legally ● IOU – not included
restricted – either CA or NCA ● Refundable deposit – not included - CA
● Time deposit in bank closed – NCA
● Postage stamps - not cash but office
● Bank overdraft – if material, CL (netted if
supplies
same bank and included in cash)
● Pension/Contingency/Preferred stock
redemption/Plant expansion/ Insurance
Fund/ Bond sinking fund - noncurrent
investment
● Equity securities – no maturity (except
preferred stock with redemption date)
, ● Travel advances - AR
Bank Reconciliation
Book Balance Bank Balance
● Bank Charges (Debit memo) - bank ● Deposit in Transit – add - Undeposited
services, printing checks, not-sufficient- receipts
funds (NSF) checks, and safe-deposit box ● Outstanding checks – minus
rentals. ● Certified check – not outstanding
● Bank Credits (Credit Memo) - note
collection, interest earned on interest-
bearing checking accounts
LOANS AND RECEIVABLES
Accounts Receivable
● Recovery of accounts written off: no effect on AR balance
● Amortized cost = Net realizable value (AR-Sales Discount-Doubtful Accounts-Write off)
● Unassigned or assigned receivables: both included
● Factored AR: not included
● Recoveries on AR written off if not included on cash received: add only to Allowance for
Doubtful Accounts (ADA) and not to NRV
● Only bad debt expense affects working capital and not write off
Aging method/Percentage of AR: amount computed = required ending ADA
Percentage of Sales: amount computed = bad debts expense
COGS + Gross margin on sales = Gross Sales
● Security deposit: non current receivable
● Unsold goods on consignment: inventory
Assignment of AR
● Net Proceeds = Notes payable - finance fee
● Equity in assigned AR (Disclosed only) = AR assigned - Notes Payable
Factoring of AR
