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Chapter 6

CHAPTER 6:CASH, RECEIVABLES AND THE TIME VALUE OF MONEY

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School
Department
Business
Course
BUSI 2160U
Professor
Michael Konopaski
Semester
Fall

Description
FINANCIAL ACCOUNTING: A CRITICAL APPROACH CHAPTER 6: CASH, RECEIVABLES AND THE TIME VALUE OF MONEY CASH:  MOST LIQUID ASSET  VITAL TO FINANCIAL HEALTH  INCLUDES NEAR CASH ITEAMS  TREASURY BILLS  GURANTEED INVESTMENT CERTIFICATES (GICs)  MONEY MARKET FUNDS IS A DOLLAR A DOLLAR?  TIME VALUE OF MONEY  A DOLLAR TODAY > A DOLLAR TOMORROW  COMPOUNDING INTEREST  EFFECTS OF INFLATION  EFFECTS OF FOREIGH CURRENCY FLUCTUATIONS  EFFECTS O UNCERTAINTY OF RECEIPT CASH MANAGEMENT:  EFFECTIVE CASH MANAGEMENT IS A KEY FUNCTION OF MANAGEMENT  CASH IS AN UNPRODUCTIVE ASSET  CHEQUING ACCOUNTS PAY NO INTEREST  MUST INVEST INTO PRODUCTIVE USES  IMPORTANT STEWARDSHIP RESPONSIBILITY OF MANAGEMENT  INTERNAL CONTROLS OVER CASH  SEGREGATION OF DUTIES  REGULAR BANK RECONCILIATIONS  SECURITY PROCEDURES TIME VALUE OF MONEY:  VALUING CASH FLOWS THAT OCCUR AT DIFFERENT TIMES CAN BE VIEWED FROM TWO PERSPECTIVES  FUTURE VALUE  PRESENT VALUE FUTURE VALUE OF INVESTMENT:  VARIABLES INCLUDE:  NUMBER OF PERIODS (n)  INTEREST RATE (r)  AMOUNT OF THE INVESTMENT (I)  FORMULA: FV = (1 + r ) x I n,r  FUTURE VALUE TABLES PRESENT VALUE OF A RECEIPT:  VARIABLES INCLUDE:  NUMBER OF PERIODS (n)  INTEREST RATE (r)  AMOUNT TO BE RECEIVED (I) n  FORMULA: FV n,r= 1/ (1 + r ) x I  PRESENT VALUE TABLES FUTURE VALUE OF AN ANNUITY:  VARIABLES INCLUDE:  NUMBER OF PERIODS (n)  INTEREST RATE (r)  PAYMENT AMOUNT (P)  FUTURE VALUE ANNUITY TABLES PRESENT VALUE OF AN ANNUITY:  VARIABLES INCLUDE:  NUMBER OF PERIODS (n)  INTEREST RATE (r)  PAYMENT AMOUNT (P)  PRESENT VALUE ANNUITY TABLES RECEIVABLES:  AMOUNTS OWING TO AN ENTITY  USUALLY RESULT FROM SELLING ON CREDIT  ACCOUNTS RECEIVABLE  CURRENT ASSET  IF DUE WITHIN ONE YEAR OTHER RECEIVABLES:  DUE FROM SHAREHOLDERS  TAX REFUNDS 
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