Cash & Cash Equivalents

PAS 7 – Statement of Cash flows

Cash – most liquid assets, cash on hand and demand deposits unrestricted.

Cash Equivalents – Short term highly liquid investments readily convertible to cash.

*Presented as one line item in the balance sheet.

Included as part of Cash:

  1. Current Account
  2. Checking Account
  3. Demand Deposit

Cash Equivalents:

  1. Time Deposit – Problem silent (part of cash equivalent).
  2. Travellers Check and Money Order.
  3. Money Market Placement –  3 months acquired before date of maturity.
  4. T – Bills – 3 months acquired before date of maturity.

Excluded from Cash:

  1. Postdated Checks.
  2. IOUS
  3. Foreign account restricted to withdrawal.
  4. Compensating Balance restricted.
  5. NSF Checks.
  6. Money on closed bank account.
  7. Bank overdraft – Current Liability (can be offset if maintained with same Bank Account ).



About Jonathan Ruiz CPA

Entrepreneur, CPA Mentor, Stock market Newbie Mentor, Influential Author and Master's Degree in International Business graduate in Hult International Business School, UK. A father of two lovely daughters.
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