This is a great way to figure out how to keep track of your assets. You can find sample problems of this online.
yes, of course
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A sample cash budget will just indicate the various sources of revenue and how it is to be spent. A cash budget is influenced by previous income and expenditure ventures.
Yes. You will receive / provide no cash or cash-equivalents. You will get / provide some assets for the prepayments.
A cash equivalent is something that can be turned into cash in a short period of time, but is not cash at the time of the disclosure of it's value. So, in order to make a balance sheet a more manageable size and to make it easier to read and interpret, cash and cash equivalents are usually consolidated and reported as one figure or as two. (Imagine looking at a 50 line balance sheet if every type of highy liquid investment was disclosed as a single line item.) As to why a company would own one.... If excess funds were available the company's management may find they can put their cash to better use by investing it in various financial instruments... that are not technically cash (hence cash equivalents).
yes, of course
The Cash Flow statement is essential because it shows how efficiently the company is spending its money, and where are they making money from. Cash equivalents are assets that can convert into cash within a short period of time. Short term investments (can go into operating, but more so in investing) and accounts receivables (operating) are good examples of cash equivalents because you are expected to receive money within the year. Ideally, you will want to see cash in accounts receivables within 30 days and ST investments within a few months. Neither of these are shown as cash equivalents in the 3 activities Cash equivalents will also be shown when finding the net change of "cash and cash equivalents".
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Debit Cash and cash equivalents. Credit Revenues or Sales.
A sample cash budget will just indicate the various sources of revenue and how it is to be spent. A cash budget is influenced by previous income and expenditure ventures.
Yes. You will receive / provide no cash or cash-equivalents. You will get / provide some assets for the prepayments.
this ratio assesses whether a company can pay its obligations using its cash. cash ratio is calculated using the following formula:Cash ratio = Cash and cash equivalents / Current liabilities
No; convert the cash into cash equivalents (like short-term CDs instead)
No, cash + cash equivalents is the most liquid account. Liquidity is how quickly an asset can be converted to cash.
Cash equivalents
No. Certificates of deposit should be classified as cash equivalents or short-term investments. This is because there are usually restrictions or penalties on these securities when they are converted to cash.
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