COMM-1106EL Chapter 6: Chapter 6 – Cash and Accounts Receivable
6 Dec 2016
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You should also be able to assess how well the company has done historically at collecting its receivables. Presenting cash and accounts receivable separately on the financial statements helps users evaluate how a company"s liquidity. In other words, has the resources necessary to meet its immediate, short-term financial obligations. Cash includes the cash physically on hand at a company, as well as cash represented by the customers" cheques held by the company for deposit, and the cash held on deposit in the company"s accounts at financial institutions. Cash is measured at its face value at the reporting date. Companies usually measure dollars using the currency where they are headquartered. One of management"s key responsibilities is to safeguard the company"s assets. This includes ensuring that the company"s assets are used effectively within the business and are not lost or stolen either internally or externally.
