Financial assets - Cash

6 important questions on Financial assets - Cash

What does the term "cash" include?

Currency itself, accounts at a bank, and any notes the bank will accept for deposit (such as checks, traveler's checks, or money orders)

What is a line of credit?

An amount of money the bank has agreed to lend in advance up to a limit, often accessible with special checks

What are common examples of cash equivalents?

Money market accounts, commercial paper (short term notes from large, trusted companies) and US Treasury bills
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Four basic objectives for cash management

1.  Accurate accounting
2.  Prevent theft and loss
3. Anticipate borrowing needs and ensure cash availability
4. Prevent poorly invested stockpiles of cash

Major actions/policies of effective cash control:

1.  Separate handling cash from recordkeeping
2. Cash budget preparation
3. Control listing of cash receipts
4. Daily deposits
5. Check payments
6. All expenditures verified before check is cut, with separation similar to #1
7. Bank statement balancing

Which account deals with minor inconsistencies in amount of cash in registers, petty cash, etc.

Cash Over and Short

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