RSM219H1 Chapter Notes - Chapter 6: Bank Reconciliation, Accounts Receivable, Bank Statement

• School: UTSG
• Department: Rotman Commerce
• Course: RSM219H1
• Professor: Scott Douglas

Document Summary

Determining the value of accounts receivable and estimating the amount that will be collected as cash is important for both external financial reporting and internal financial management. We will see the accounting and management issue related to cash and it receivables- the most liquid asset. Cash and a/r are the most liquid assets of a company, using them and the inventory, the company can pay off its short-term debts. Cash does(cid:374)(cid:859)t (cid:373)ea(cid:374) ph(cid:455)si(cid:272)al (cid:272)ash, it (cid:373)ea(cid:374)s (cid:272)ash a(cid:374)d cheques, amount in bank account etc. Cash i(cid:374)(cid:272)ludes ph(cid:455)si(cid:272)al (cid:272)ash, (cid:272)he(cid:395)ues i(cid:374) the (cid:271)a(cid:374)k gi(cid:448)e(cid:374) (cid:271)(cid:455) (cid:272)usto(cid:373)e(cid:396)s a(cid:374)d (cid:272)ash i(cid:374) the (cid:272)o(cid:373)pa(cid:374)(cid:455)(cid:859)s bank account. Cash equivalents are amounts that can easily be converted into known amount of cash, meaning that there is no doubt about the amount of cash that will be received when they mature; example- treasury bills. Cash is measured at its face value on the given date of financial reporting.