MGAB01H3 Lecture : Reporting Cash

67 views1 pages

ochretortoise616

3 Nov 2010

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

azizs2026mac and 38565 others unlocked

MGAB01H3 Full Course Notes

Verified Note

16 documents

Document Summary

Many companies combine cash with cash equivalents. Cash equivalents are highly liquid investments that can be converted into a specific amount of cash. These equivalents include short-term deposits, short-term investments (treasury bills and money market funds), and short-term notes. Some companies may be in a cash deficit position. This can happen when the company is in an overdraft position. A bank overdraft occurs when a cheque is written for more than the amount in the bank account. A company may also have cash that is restricted for a special purpose (plant expansion). If it can be used within the next year, the amount should be recorded as a current asset; otherwise they are recorded as a noncurrent asset. Banks commonly require borrowers to maintain minimum cash balances. These are called compensating balances, which are a form of restricted funds. The cash flow statement provides information about where cash came from and what it is used for.

Related Questions

4)Managers place a high priority on internal control systems because the systems assistmanagers in all of the following except:

A)Protecting assets.

B)Urging adherence to company policies.

C)Promoting efficient operations.

D)Ensuring reliable accounting.

E)Assuring that no loss will occur.

5)A properly designed internal control system:

A)Insures profitable operations.

B)Eliminates the need for an audit.

C)Is not necessary if the company uses a computerized system.

D)Requires the use of non-computerized systems.

E)Lowers the company's risk of loss.

6)A company's internal control system:

A)Eliminates the need for audits.

B)Eliminates the need for managers' certification of controls.

C)Monitors company and employee performance.

D)Eliminates human error.

E)Eliminates the company's risk of loss.

7)The impact of technology on internal controls includes:

A)Elimination of fraud.

B)Elimination of the need to bond employees.

C)Reduced processing errors.

D)Elimination of separation of duties.

E)Elimination of the need for regular audits.

8)Internal control systems are:

A)Required only if a company plans to engage in interstate commerce.

B)Developed by the Internal Revenue Service for all U.S. companies.

C)Required by Sarbanes-Oxley (SOX) to be documented and certified if the

company's stock is traded on an exchange.

D)Developed by the Securities and Exchange Commission for public companies.

E)Developed by the Small Business Administration for non-public companies.

9)Cash equivalents:

A)Include 6-month certificates of deposit.

B)Are short-term, highly liquid investment assets.

C)Include money orders.

D)Include checking accounts.

E)Are recorded in petty cash.

10)Cash equivalents meet all of the following criteria except:

A)Include short-term investments purchased within 3 months of their maturity

dates.

B)Are readily convertible to a known cash amount.

C)Have a market value that is not sensitive to interest rate changes.

D)Include short-term U.S. treasury bills.

E)Are more liquid than cash.

azureporcupine205

Argentine Company reported the following accounts on December 31, 2017:

cash on hand	1,000,000
Petty cash fund	50,000
Thrift Bank current account	2,000,000
PCB current account	1,500,000
PBB current account (overdraft)	(200,000)
ABC treasury bill-120 days	3,000,000
DEF time deposit - 90days	2,000,000
Bond sinking fund	2,500,000

* The cash on hand included a customer postdated check of 150,000 and postal money order of 50,000.

* The petty cash fund included unreplenished petty cash vouchers for 10,000 and an employee check for 5,000 dated January 31, 2018.

* The DEF time deposit is set aside for acquisition of land to be made in early January 2018.

* The bond sinking fund is set aside for payment of bond payable due December 31,2018.

Required:

1. Prepare adjusting entries on December 31,2017.

2. Compute the total amount of cash and cash equivalents.

3. Explain the presentation of the items excluded from cash and cash equivalents.

tealcrab358

Here's the Link to the Target 2016 annual report- https://corporate.target.com/annual-reports/pdf-viewer-2016?cover=28067&parts=28073

On page 32 of the annual report is Target Income statement (called the Consolidated Statements of Operations). On page 34 is the Balance Sheet (called the Consolidated Statements of Financial Position).

Note: the Balance Sheet ending date for current Fiscal Year (FY) 2016 is January 28, 2017. The Balance Sheet ending date for prior FY 2015 is January 30, 2016.

Requirements: Answer the following questions using Target 2016 Annual Report. You may work with another student but the work must be on your own. Use correct formatting and proper grammar. The financial reports are stated in millions of dollars. When possible, please write answers exactly as they appear in the financial statements. Include commas when writing dollar amounts. Do not include dollar signs. Do not include the word million. Do not include the % sign.

Question 1. How much did Targetâs cash and cash equivalents balances (including short-term investments) change during the current FY?

Answer: $______million

Question 2. What were the beginning and ending cash and cash equivalents balances (including short-term investments)?

Answer: Beg = $ million

Answer: End = $ million

Question 3. Review Note 11 Cash Equivalents, in the Notes to Consolidated Financial Statements. What type of instruments does Target consider to be cash equivalents?

Please type exactly as it appears in the Note.

Question 4. Determine the cash ratio for the current FY. Round to two decimal places. (Subtract short-term investments from the cash and cash equivalents balance on the balance sheet.)

Answer: _____

MGAB01H3 Lecture : Reporting Cash

MGAB01H3 Full Course Notes

Document Summary

Get access

Related Documents

MGAB01H3 Chapter Notes - Chapter 2: Current Asset, Intangible Asset, Historical Cost

MGAB01H3 Chapter Notes - Chapter 5: Money Market Fund, Cash Flow, Commercial Paper

MGAB01H3 Chapter Notes - Chapter 2: Current Liability, Retained Earnings, Accounting Information System

Related Questions