TAILIEUCHUNG - Lecture Intermediate accounting: IFRS edition - Chapter 7: Cash and receivables

In this chapter, we begin our study of assets by looking at cash and receivables-the two assets typically listed first in a balance sheet. Internal control and classification in the balance sheet are key issues we address in consideration of cash. For receivables, the key issues are valuation and the related income statement effects of transactions involving accounts receivable and notes receivable. | CASH AND RECEIVABLES Chapter 7 Chapter 7: Cash and Receivables We begin our study of assets by looking at cash and receivables—the two assets typically listed first in a statement of financial position. For cash, the key issues are internal control and classification in the statement of financial position. For receivables, the key issues are valuation and the related income statement effects of transactions involving accounts receivable and notes receivable. Cash and Cash Equivalents Balances in current bank accounts Currency and coins Cash equivalents are short-term, highly liquid investments that can be readily converted to cash. Money market funds Treasury bills Commercial paper Cash Items for deposit such as checks and money orders from customers Cash includes currency and coins, balances in current bank accounts, and items acceptable for deposit such as checks and money orders received from customers. Cash equivalents include short-term, highly liquid investments that are: easily converted into a known amount of cash. close to maturity. not sensitive to interest rate changes. Examples are money market funds, treasury bills, and commercial paper. Internal Control Encourages adherence to company policies and procedures Promotes operational efficiency Minimizes errors and theft Enhances the reliability and accuracy of accounting data The success of any business enterprise depends on an effective system of internal control. Internal control refers to a company’s plan to (a) encourage adherence to company policies and procedures, (b) promote operational efficiency, (c) minimize errors and theft, and (d) enhance the reliability and accuracy of accounting data. From a financial accounting perspective, the focus is on controls intended to improve the accuracy and reliability of accounting information and to safeguard the company’s assets. Recall from our discussion in Chapter 1 that Section 404 of the Sarbanes-Oxley Act of 2002 requires that companies document their

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• Cash equivalents
• Internal control of cash
• Cash receipts
• Intermediate accounting
• Lecture Intermediate accounting
• Financial Accounting
• Sash flows revisited
• Statement of cash flows
• Financial reporting
• Direct method
• Lecture Accounting
• Accounting information
• Accounting standards
• Cash management program
• Internal control system
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• Operating activities
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