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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Computing; the Cash Balance Listed below are ten items that may be found on a balance sheet.

Required:

  1. 1. Indicate with or no whether each of the items should be included in the cash balance presented on the balance sheet. Also indicate the normal balance sheet treatment for those items not included as cash.

Chapter 6, Problem 1E, Computing; the Cash Balance Listed below are ten items that may be found on a balance sheet.

  1. 2. Next Level What is the overriding concept in determining whether an item included in or excluded from cash?

1.

To determine

State whether each of the items must be included in the cash balance on the balance sheet with yes or no and provide the normal balance sheet treatment for the items that are not included as cash.

Explanation

Cash:

Cash is the most liquid asset and it is the source used to engage in the day-to-day transactions of business, payment made to employees, taking advantage of opportunities available in business and meeting the debt obligations of company. Components of cash are as follows;

  • Bank drafts,
  • Checks and money orders,
  • Coins and currency,
  • Undeposited credit card sales receipt,
  • Unrestricted funds on deposit with bank.

Indicate each of the items that is included in the cash balance on the balance sheet with “yes” or “no”:

ItemInclude in cash balanceClassification of items excluded
NSF checksNoAccounts Receiv...

2.

To determine

Explain regarding the concept of “overriding” in ascertaining whether an item is included in or excluded from cash.

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