CHAPTER II
Accounts
Cash
Definition of Terms
Initial
Measurement
Subsequent
Measurement
All financial
instruments are
initially measured at
fair value except for
certain related party
transactions. The
definition of fair
value contains a
presumption of
dealing at arm’s
length, so Section
3840 contains
provisions for
measuring
transactions when
that presumption is
not met.
all current instruments
are measured at
undiscounted cash or
consideration to be
received
Is acceptable by bank
or other financial
institution fir deposit or
face value.
Cash on
Hand
Undeposited cash
collection and cash
items awaiting deposit.
Undeposited
Cash Collection
Cash receipts that has
been added to the
company’s cash
balance but has not
been added to the
balance reported on
the bank statement.
Customer's
Check
Traveler's Check
Manager's Check
Cash in
Bank
Bank Drafts
Are written order
addressed to the bank
to pay an amount of
money to the order of
the maker.
Money Order
A demand credit
instrument issued and
payable by a post
office.
unrestricted funds
deposited in a bank
that can be withdrawn
upon
Demand Deposit
Funds deposited in a
bank that can be
withdrawn upon
demand.
Petty Cash
Fund intended to pay
minor expenses.
Working
Funds
Imprest System
Is characterized by daily
deposit of all cash
receipts intact to the
bank and making
disbursements through
issuance of checks.
Fluctuating
System
Is handling petty cash
fund wherein every
expenses/voucher is
debited directly with
petty cash fund as a
credit.
Change Fund
Payroll Fund
Bank account used
solely for paying
employee’s salaries.
Dividend Fund
Tax Fund
Interest Fund
Cash Equivalent
Short-term,
investments assets that
are readily convertible
into a known cash
amount or sufficiency
close to their maturity
date (usually within 90
days) so that the
market value is not
sensitive to interest
rate exchange.
Consideration in
reporting Cash
Foreign Currency
Cash in Closed
Bank
Post-dated
Checks
Checks, which at the
date of issuance, bears
a future date; will be
honored by the bank
only on or after the
date indicated on the
face of the check.
NSF Checks
“not sufficient fund”,
those that cannot be
covered by funds in the
debtor’s
DAIF Checks
“Drawn against
insufficient funds”,
check drawn by a
depositor but is
subsequently returned
by the bank to the
payee because the
amount of the deposit
is not enough to cover
the amount of the
check.
DAUD Checks
“drawn against unclear
deposit”
Expense
Advances
Bank Overdraft
Are written checks of
depositor greater than
its depositor’s bank
account.
Undelivered or
Unreleased
Check
Are the company’s
check drawn and
recorded but are not
actually issued or
delivered to the payees
as of the reporting
date.
Compensating
Balances
Are minimum amounts
that a company agrees
to maintain in a bank
checking account as
support or collateral for
a loan by the depositor.
Cash Set Aside
for Long term
Specific Date
Cash
Management
Segregation of
Duties
Voucher System
A system to control
cash disbursements.
Internal Audits
at Irregular
Intervals
All policies and
procedures used to
protect assets, ensure
reliable accounting,
promote efficient
operations, and urge
adherence to company
policies.
Periodic
Reconciliation of
Bank Statement
Bank
Reconciliation
Report that explains
the differences
between the book
(company) balance of
cash and the cash
balance reported on
the bank statement.
Bank and
Book
Balances
Reconciled
to a Correct
Cash Balance
Bank
Balances
Reconciled
with Book
Balance
Book
Balance
Reconciled
with Bank
Balance
Proof of
Cash
Setting Petty Cash Fund

Petty Cash
Cash in Bank
Replenishment of Petty Cash Fund
 Expenses
xx
xx
xx
A four-column bank
reconciliation of
beginning and ending
balances of cash as well
as of cash receipts and
disbursements during
the period.
Cash in Bank
Accounting for Cash Shortage
 Cash Short or Over
Cash in Bank
 Due from Cashier
Cash Short or Over
or
 Loss from Cash Shortage
Cash Short or Over
xx
xx
xx
xx
xx
xx
xx
Accounting for Cash Overage



Cash in Bank
xx
Cash Short or Over
Cash Short or Over
xx
Miscellaneous Expense
or
Cash Short or Over
xx
Payable to Cashier
xx
xx
xx
Bank Reconciliation
Balance per bank statement
Add:
Deposit in transit
Receipts not yet deposited
Total
Deduct:
Outstanding check
Adjusted cash balance
xx
xx
xx
xx
_______
xx
_______
xx
Balance per books
Add:
Note collected by bank
Interest on note collected
Total
Deduct:
Bank service charge
NSF check returned by bank
Adjusted cash balance
xx
xx
xx
_______
xx
xx
xx
_______
xx
Adjustments




Cash in Bank
Notes Receivable
Interest Revenue
Miscellaneous Expense (or Bank Service Charge)
Cash in Bank
Accounts Receivable
Cash in Bank
Accounts Payable
Cash in Bank
xx
xx
xx
xx
xx
xx
xx
xx
xx
Proof of Cash
Nov. 30
Unadjusted bank
balances
Deposit in transit
November 30
Receipts
December
Disbursement
xx
xx
xx
(xx)
xx
Dec. 31
Xx
December 31
Outstanding
checks
November 30
December 31
Adjusted balance
per bank
xx
(xx)
xx
(xx)
xx
(xx)
xx
Xx
December
Receipts
Disbursement
Nov. 30
Unadjusted book
balances
Bank service
charges
November
December
Bank credit
memo in
November for
customer’s note
collected by bank
Bank credit
memo in
December for
proceeds of bank
loan granted on
Dec. 31
Customer’s
DAIF checks
returned by bank
November
xx
Xx
xx
xx
xx
xx
xx
Xx
(xx)
xx
(xx)
(xx)
xx
(xx)
Dec. 31
xx
(xx)
December
Adjusted
balances, per
books
xx
Statement Presentation
Cash on hand
xx
Cash in bank
xx
Petty cash fund
xx
Treasury bill
xx
Total cash and cash equivalent
xx
xx
xx
(xx)
xx
Xx