Cash
Group #4
Bajacan, Karla Mae
Carlos, Juan Paolo
Castro, Patrick
Lu, Enrico Rafael
What is Cash?
• Layman’s point of view “cash”
simply means money.
– Money is the standard medium of
exchange in business transaction.
• Immediately available for use
• Cash includes: coins, bills,
currencies, checks, money orders,
bank drafts and deposits.
• Cash is not a legal tender.
- Legal tender medium of payment that can be used extinguish a
debt, or meet a financial obligation.
Categories of Cash
1. Cash on Hand
– undeposited cash collection
– Examples: Bank drafts, money orders
and traveler’s checks
2. Cash in Bank
− Includes demand deposits
3. Cash Fund
− Segregated for current use
Petty cash fund
Tax fund
Payroll fund
Dividend fund
Change fund
Interest fund
Special Cases
1. Deposits
- closed bank
- time deposits
2.
3.
4.
5.
Foreign Currencies
Post-dated Checks
Stale Checks
Outstanding Checks
What is Cash
Equivalents?
 Short-term highly liquid
investments
 Acquired 3 months before maturity
 Debt instrument
Example: Three month BSP treasury
bill
Internal Control
- All policies and procedures used to
protect assets, ensure reliable
accounting, promote efficient
operations, and urge adherence to
company policies.
1. Segregate Custodianship and
Recording Functions
2. Voucher System
3. Issue official receipt
4. Place cash in bank
5. Bank Reconciliation
Petty Cash Fund
- Petty Cash is money set aside to pay
small expenses which cannot be paid
conveniently by means of check.
 Methods of Handling Petty Cash
Fund
a.Imprest Fund System
b.Fluctuating Fund System
Bank Reconciliation
– A statement prepare by an enterprise
which brings into agreement the cash
per book and cash balance per bank.
• Bank statement – bank report on
the depositor’s beginning and
ending cash balance, and a listing
of its changes, for a period.
Reconciling items:
•Book Reconciling items
1. Credit Memos
 Notes receivables collected by bank
 Proceeds of bank loan granted to
depositor
 Matured time deposit transferred by bank
to the account of the depositor
2. Debit Memos




No sufficient Fund
Technically Defective Check
Bank Services Charges
Reduction of Loan
• Bank Reconciling Items:
1. Deposit in Transit collections
already recorded by the depositor as
cash receipts but not yet reflected on
the bank statement.
2. Outstanding Checks checks
already recorded by the depositor as
cash disbursement but not yet
reflected on the bank statement.
Errors
 Book Errors
a. Understatement of cash receipts
b. Overstatement of cash receipts
c. Understatement of cash
disbursement
d. Overstatement of cash
disbursement
 Bank Errors
a.
b.
c.
d.
Understatement of bank credit
Overstatement of bank credit
Understatement of bank debit
Overstatement of bank debit