Accounting for cash and cash equivalents - Реферат

Theme 1. Accounting for cash and cash equivalents Сontents 1. Definition of current assets and their classification 2. General characteristics of cash and cash equivalents. Cashless payment forms 3. Accounting for cash on hand 4. Accounting for the money on current accounts 5. Accounting for cash on card accounts account current cash payment 1. Definition of current assets and their classification In accordance with the Principles of Preparation and Presentation of Financial Statements, the assets - the property, proprietary and personal welfare and rights of the subject, with a value assessment. Future economic benefits embodied in the asset - is a potential that will directly or indirectly, in cash flow or cash equivalents of the subject. Maturity assets can be divided into: a) long-term (over one year); b) current or short-term (one year). According to IAS 1 Presentation of Financial Statements asset should be classified as current when: (a) it expects to realise the asset, or intends to sell or consume it, in its normal operating cycle; (b) it holds the asset primarily for the purpose of trading; (c) it expects to realise the asset within twelve months after the reporting period; or (d) the asset is cash or a cash equivalent (as defined in IAS 7) unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets shall be classified as non-current. For current assets include the following items: 1) stocks regardless of their processing and marketing; 2) Prepaid expenses, which can be written off over a period of one year from the balance sheet date; 3) cash. Cash, on the use of which restrictions are included in current assets if the restrictions will be lifted for one year; 4) short-term investments with a current value, if it is different from their carrying value; 5) the receivable to be received within one year from the balance sheet date; 6) advance payments for the purchase of current assets; 7) accounts receivable; 8) notes receivable; 9) receivables arising on intercompany transactions between the main economic partnership and its subsidiaries partnerships; 10) receivables company officers; 11) other receivables. 2. General characteristics of cash and cash equivalents. Cashless payment forms According to International Accounting Standard 7 (IAS 7), Cash “comprises cash on hand, the money on current accounts and demand deposits”. And cash equivalents “are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value”. Cash Cash is the money in the form of currency. Currency includes currency notes and coins. Any currency notes and coins held by an enterprise are part of the term “cash”. Demand deposit is a type of an account from which funds can be withdrawn at any time without having to inform the bank or depository institution. Most of the checking and saving accounts are demand deposits. Cash Equivalent Cash equivalents are investments that can be readily converted to cash. Common examples of cash equivalents include commercial paper, treasury bills, short term government bonds, marketable securities, and money market holdings. An item should satisfy the following criteria to qualify for cash equivalent: · The investment should be short term. They should mature in less than three months. If they mature in more than three months they will be classified as other investments. · They should be highly liquid. This means that they should be easily sold in the market. The buyers of these investments should be easily available. · They should be convertible to known amounts of cash. This means that their market price should be available and this market price should not be subject to significant fluctuations. · They should not be too risky. There should be very little risk of changes in their value. This means that equity shares cannot be classified as cash equivalents. But preferred shares