AFM101 Lecture Notes - Lecture 9: Money Market Fund, Cash Cash, Bank Reconciliation
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Document Summary
Companies usually combine all cash amounts into a single total balance sheet called cash & cash equivalents . Cash is the most liquid asset because it is the medium of exchange and used for paying bills, employees" salaries, repaying loans, buying equipment, etc. Cash equivalents include liquid assets such as treasury bills, commercial papers, and money market funds, which are interest bearing accounts with less than 3 months maturity. Keeping cash in a bank account helps control cash because banks have established practices for safeguarding customers" money. The documents used to control a bank account include: signature card, bank statement, deposit slip, cheque. There are two records of the cash businesses hold: the cash account in the company"s general ledger, the cash record is known as chequebook or the books , the bank statement. The books and bank statements usually have different cash balances due to time differences, missing items, and recording errors.