FAR 6808 b.

Money market instruments or

CASH AND CASH EQUIVALENTS commercial papers
1. CASH c. Time deposit
A. Cash on hand – currencies and checks If silent as to date of acquisition, assume as current
 Undelivered checks – checks written but
not yet delivered therefore still part of
entity’s cash. Treatment is to re-establish
liability and return to cash
Cash xx
Accounts payable xx
 Postdated check – date is subsequent to
the end of reporting period. Treatment is
to re-establish liability and return to cash
Cash xx
Accounts payable xx
 Stale checks – check not enchased within
a certain period of time
If immaterial:
Cash xx
Misc. income xx
If material:
Cash xx
Accounts payable xx
B. Cash in bank – present the
adjusted/reconciled amount
a. Compensating balance:
 Legally restricted (formal) – excluded in
cash always. Classified as either current
asset or noncurrent asset in accordance
with the related term of the loan
If silent as to term of restriction
present compensating balance as
noncurrent
 Not legally restricted (informal) – part of
cash presented in C and CE
C. Cash fund
a. If for operations or to settle short
term liabilities included as part of
cash
b. If to settle noncurrent obligations
or acquisition of noncurrent assets
– presented as noncurrent asset
- Reclassified as current if related
obligation becomes current. However, if
for acquisition of NCA always noncurrent.

2. CASH EQUIVALENTS – investments acquired 3

months before maturity
a. Treasury bills
Item Classification Restricted cash Noncurrent asset
Undeposited cash collection Cash
Customer’s check Cash
Cashier’s or manager’s check Cash
Traveler’s check Cash
Bank drafts Cash
Money orders Cash
Demand deposit or Checking Cash
account or Current account or
Commercial deposit
Saving deposit or saving Cash
account
Petty cash fund Cash
Payroll fund Cash
Interest fund Cash
Dividend fund Cash
Tax fund Cash
Travel fund Cash
Sinking fund* Noncurrent investment (or
*Based on classification of Cash)
related liability
Preference share redemption Noncurrent investment
fund
Contingent fund Noncurrent investment
Insurance fund Noncurrent investment
Plant expansion fund* Noncurrent investment
Replacement fund* Noncurrent investment
*Noncurrent, regardless of
disbursement date
Pension fund Noncurrent investment
3-month BSP treasury bill Cash equivalent
3-year BSP treasury bill Cash equivalent
purchased 3 months before
maturity
3-month time deposit or Cash equivalent
certificate of deposit
3-month money market Cash equivalent
instrument or commercial
paper
Preference shares purchased 3 Cash equivalent
months before redemption
date
Equity securities Current/noncurrent
investment
Deposits in foreign bank, not Cash
subject to foreign exchange
restriction
Deposits in foreign bank, Noncurrent asset
subject to foreign exchange
restriction
Bank overdraft  Current liability (silent)
Bank overdraft in one bank, Offset against the other
with two or more bank bank accounts
accounts
Bank overdraft, amount not Offset against other bank
material accounts
Compensating balance, not Cash (silent)
 legally restricted, informal
agreement
Compensating balance, legally Cash held as compensating
restricted, formal agreement, balance (current asset)
related loan is short-term
Compensating balance, legally Noncurrent investment
restricted, formal agreement,
related loan is long-term
Undelivered or unreleased Cash
check*
Postdated check delivered* Cash

Postdated check received* Accounts Receivable

Stale check or check long- Cash
outstanding (not encashed
within 6 mos.)*
*Adjusting entries needed
Stale check received Accounts receivable
Treasury bonds Noncurrent investment
Credit memo

CASH EQUIVALENTS
Term Classification
3 months or less Cash equivalent
(silent)
More than 3 Short term financial asset or
months but within temporary  investment (current asset)
1 year
More than 1 year Noncurrent investment

PETTY CASH FUND

Item Included or Excluded
Currency and coin Included
Collections for Christmas party Excluded; cash shortage
Employee’s IOU Excluded; receivable
Postage stamp Excluded; cash shortage
Check payable to petty cash Included
(Replenishment check)
Check payable to cashier as salary Included
(Accommodation check)

Notes:
 Same year-end Petty Cash Fund balances for both Imprest and
Fluctuating fund system.
 Balance of petty cash before replenishment – use Fluctuating
 Reversing entry for Imprest at the beginning of the next year
 Amount reported as “cash” – not including cash equivalents
 Checkbook balance – cash in bank balance
 Cash overage (shortage) – accounted for less accountability