ACC 406 Lecture Notes - Lecture 7: Market Liquidity, Accounts Payable, Financial Instrument
16 Dec 2017
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Generally, manufacturers and wholesales have a significant amount of accounts receivable. Nontrade receivables (items like interest receivable, amounts due from officers, and advances to employees) Cash: most liquid asset and is the standard medium of exchange. Also classified under certified cheques, money orders, cashier"s cheques, and bank drafts. It is also appropriate to classify money-market funds, certificates of deposit, and similar types of deposits and short-term paper. Reporting cash: restricted cash is separately disclosed and reported in the current assets section or is classified separately in the long-term assets section (dependent on date of availability) Compensating balances min. amount of cash required by lending institutions to be kept in chequing or savings accounts. *to ensure investors are not misled about cash that is readily available, legally restricted balances have to be reported separately in current or non-current assets: cash in foreign currencies. Many companies have bank accounts in foreign countries.
