CCE Hehe

Definition
Cash & Cash Equivalent

Cash
Cash includes money and any other negotiable instrument that is
payable in money and acceptable by the bank for deposit and
immediate credit.
Unrestricted Cash
There is no specific standard dealing with “cash”.
The only guidance is found in PAS 1,paragraph 66, which provides that
the entity shall clasify an assets as current when the asset is cash or cash
equivalent unless it is restricted to settle a liability for more than twelve
months after the end of the reporting period.
Accordingly to be reported as “cash” it must be unrestricted in use.
Cash items included in cash:
A. Cash on hand - this includes undeposited cash
collections and other cash items awaiting deposit scuh
as customer’s checks, cashier’s or manager’s checks,
traveler’s checks, bank drafts and money order.
B. Cash in Bank - this includes demand deposits or
checking account and saving deposit which are
unrestricted as to withdrawals.
C. Cash fund set aside for current purposes such as
petty cash fund, payroll fund and dividend fund.
Cash Equivalent
PAS 7, paragraph 6, defines cash equivalents as short-term and highly liquid
investments that are readily convertibleinto cash and so near their maturity that they
present insignificant risk of changes in value becauseof changes in interest rates.
The statndard further states that only highly liquid investments that are acquired
three months before maturity can qualify as cash equivalents.
Examples of Cash Equivalent are:
A. Time Deposit
B. Money Market
C. Treasury Bills
NOTE: If an item cannot be included as cash and cash equivalent because it did not qualify the cut-
off time period, it will be classified as investments, short- term or long term,ending on the period up
to maturity.
If the problem is silent with regards to the above items (a-c), they are classified as cash equivalents.
Cash & Cash Equivalent
This category includes cash on hand, petty cash fund, cash in

bank and any cash equivalent.
However, the cash and cash equivalent shall be unrestricted in

use, meaning available anytime for the payment of current
obligations.
Accounting Policy
Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, demand
deposits. Cash Equivalent are short-term highly liquid
investments that are readily convertible to known amount of
cash, which are subject to an insignificant risk of changes in
value and have a maturities of three months or less at the date
of acquisition. Bank overdrafts are shown within borrowings in
current liabilities on the statement of
financial position.
Recognition of Cash
PAS 1 paragraph 66 provides that “an entity should

classify asset as current when it is cash or cash
equivalent unless the asset is restricted from being
exchanged or used to settle a liability for at least 12
months after the reporting period” In conclusion, to
report an item as part of cash, it should be
UNRESTRICTED IN USE.
Recognition of Cash Equivalent
Only debt instruments acquired within three (3) months
or less before their maturity date can qualify as cash
equivalents.
Note: Equity Securities cannot qualify as cash equivalents
since they do not have maturty date, except redeemable
preferrence shares (with mandatory redemption) that are
required 3 months before their redemption date can qualify
as cash equivalents.
Accounting Treatment
Measurement of Cash Item Measurement
Cash in local currency at face value
Cash in foreign currency at face value but

translated to Philippine
Peso using closing rate at
year-end
Cash in closed bank or estimated realizable value
banks in bankruptcy if the amount recoverable
is to be lower than the
face value.
Presentation &
Disclosures
The caption cash and cash equivalents should be shown as
the first line item under current assets.
This caption includes all cash items, such as cash on hand,

cash in bank, petty cash fund and cash equivalents which are
unrestricted in use for current operations.
However, the details comrprising the cash and cash eqivalents

should be disclosed in the notes to financial statements.
Presentation & Disclosures
Cash and cash equivalents are those items which are

recorded in the Statement of Financial Position or Balance
Sheet of the company and refers to the value of the assets
of the company which are held in cash or can be easily
convertible to cash.
Disclosure of accounting policy for cash and cash equivalents, i
ncluding the policy for determining which items are treated as
cash equivalents.
Other information that may be disclosed includes:
(1) the nature of any restrictions on the entity's use of its cash and cash
equivalents,
(2) whether the entity's cash and cash equivalents are insured or expose
the entity to credit risk,
(3) the classification of any negative balance accounts (overdrafts), and
(4) the carrying basis of cash equivalents (for example, at cost) and
whether the carrying amount of cash equivalents approximates fair
value.
PRESENTATION OF FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
- are the means by which the information accumulated and processed in
the financial accounting is periodically communicated to the users.
- are the end product or main output of the financial accounting process.
GENERAL PURPOSE FINANCIAL STATEMENTS
-are directed to all common users and not to specific users.
STATEMENT OF FINANCIAL POSITION
• Statement of Financial Position is a formal statement showing the three
elements comprising financial position, namely asset,liabilities and equity.
Presentation in Financial Statement
Group Company
Statement of Financial Position
December 31, 2021
ASSETS
Current Assets:
Cash and Cash Equivalent P 510,000.00
Statement of Cash Flows
- is a component of financial statements summarizing the operating,
investing , and financing acticvities of an entity.
Classification of Cash Flows
Operating activities - cash flows derived primarily from the principal
revenue producing activities of the entity.
Investing activities - cash flows derived from the acquisition and
disposal of long term assets and other investments not included in cash
equivalent.
Financing activities - cash flows derived from the equity capital and
borrowings of the entity.
Group Company
Statement of Cash Flows
December 31, 2021
Cash and cash equivalents -January 1 P 3,000,000.00

Total Net Cash provided by operating activities 2,500,000.00
Total Net Cash used by investing activities (500,000.00)
Total Net Cash provided by financing activities 2,400,000.00
Cash and cash equivalents - December, 31 P 7,400,000.00
•Cash receipts are cash provided and
therefore increase cash and cash
equivalents.
•Cash Payments are cash used and therefore

decrease cash and cash equivalents
Notes to Financial Statement
Cash and cash equivalent are generally recorded in the

balance sheet of a company under the current asset section
with the same name as cash and cash equivalent and only the
overall value is shown. The break up of the overall sum is
provided by a note at the end of the financial statement. The
cash and cash equivalent will generally bear a number beside
its total, which generally describes the serial number in the
notes section to understand the break up of the cash and cash
equivalent.
Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, demand deposits. Cash
Equivalent are short-term highly liquid investments that are readily
convertible to known amount of cash, which are subjevt to an insignificant
risk of changes in value and have a maturities of three months or less at the
date of acquisition. Bank overdrafts are shown within borrowings in current
liabilities on the statement of
financial position.
Note 1 - Cash and Cash Equivalents

Cash in hand P 30,000.00
Cash in bank 300,000.00
Petty cash fund 10,000.00
BSP Treasury Bill, purchased on December 1, 2021
and due March 1, 2022 170,000.00
Total Cash and Cash Equivalents P 510,000.00

CCE Hehe

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Definition

Cash & Cash Equivalent

This category includes cash on hand, petty cash fund, cash in

However, the cash and cash equivalent shall be unrestricted in

PAS 1 paragraph 66 provides that “an entity should

Cash in foreign currency at face value but

This caption includes all cash items, such as cash on hand,

However, the details comrprising the cash and cash eqivalents

Cash and cash equivalents are those items which are

Cash and cash equivalents -January 1 P 3,000,000.00

•Cash Payments are cash used and therefore

Cash and cash equivalent are generally recorded in the

Note 1 - Cash and Cash Equivalents

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