المساعد الشخصي الرقمي

مشاهدة النسخة كاملة : Overview of external financial reporting



محاسب متخصص
03-24-2014, 01:30 PM
Overview of external financial reporting
(Unit 11)





Overview of external financial reporting


11.1 conceptual framework underlying financial accounting

Nature of cash
· First presented item in asset section of balance sheet being the most liquid asset.
· On the balance sheet, only one cash account is presented, reflecting all unrestricted cash.

Items of cash
· Must be readily available for use by business and can have no restrictions placed on its use.
· Consists of;
o Coin and currency on hand including petty cash and change funds.
o Demand deposits (checking accounts).
o Time deposits (saving accounts).
o Near-cash assets (un-deposited checks).

Cash equivalents
Short-term, highly liquid investments having the following characteristics:
· Readily convertible into known amounts of cash.
· So near maturity, that interest rate risk is insignificant.
· Have an original maturity of 3 months or less.
Such as treasury bills, money market funds, short term commercial paper…etc

Restricted cash
· Cash designated for special uses, should be held in separate bank account.
· Nature of use will determine whether such amount will be classified as current or non-current.

Compensating balances
· As part of a loan agreement, borrower may keep an average or minimum amount on deposit with lender.
· Reporting depend on duration of the agreement,
o If balances related to short-term agreement, it is reported as cash or cash equivalent at current asset.
o If balances related to long-term agreement it should separately classified in long-term asset as investment or other assets.

Trading securities


12.2 statement of financial. Position
· It is an asset recognized to reflect a claim against another party for the receipt of money, goods, or services
· Recorded as current if it is reasonably expected to be collected within one year or entity’s normal operating cycle.
· Trade receivables, arises from credit sales (normally unsecured and nonbearing interest).
· Non-trade receivables such as lease receivables, deposits to guarantee payment or to cover possible debts, advances to shareholders, tax refunds, interest, dividends, royalties accrued…etc.