Accounting for cash and cash equivalents

Researching definition of current assets and their classification. Analysis of general characteristics of cash and cash equivalents, cashless payment forms. Accounting for cash on hand, for the money on current accounts and for cash on card accounts.

Рубрика Финансы, деньги и налоги
Вид реферат
Язык английский
Дата добавления 12.04.2015
Размер файла 35,0 K

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Theme 1. Accounting for cash and cash equivalents


1. Definition of current assets and their classification

2. General characteristics of cash and cash equivalents. Cashless payment forms

3. Accounting for cash on hand

4. Accounting for the money on current accounts

5. Accounting for cash on card accounts

account current cash payment

1. Definition of current assets and their classification

In accordance with the "Principles of Preparation and Presentation of Financial Statements", the assets - the property, proprietary and personal welfare and rights of the subject, with a value assessment. Future economic benefits embodied in the asset - is a potential that will directly or indirectly, in cash flow or cash equivalents of the subject.

Maturity assets can be divided into:

a) long-term (over one year);

b) current or short-term (one year).

According to IAS 1 "Presentation of Financial Statements" asset should be classified as current when:

(a) it expects to realise the asset, or intends to sell or consume it, in its normal operating cycle;

(b) it holds the asset primarily for the purpose of trading;

(c) it expects to realise the asset within twelve months after the reporting period; or

(d) the asset is cash or a cash equivalent (as defined in IAS 7) unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets shall be classified as non-current.

For current assets include the following items:

1) stocks regardless of their processing and marketing;

2) Prepaid expenses, which can be written off over a period of one year from the balance sheet date;

3) cash. Cash, on the use of which restrictions are included in current assets if the restrictions will be lifted for one year;

4) short-term investments with a current value, if it is different from their carrying value;

5) the receivable to be received within one year from the balance sheet date;

6) advance payments for the purchase of current assets;

7) accounts receivable;

8) notes receivable;

9) receivables arising on intercompany transactions between the main economic partnership and its subsidiaries partnerships;

10) receivables company officers;

11) other receivables.

2. General characteristics of cash and cash equivalents. Cashless payment forms

According to International Accounting Standard 7 (IAS 7), Cash “comprises cash on hand, the money on current accounts and demand deposits”. And cash equivalents “are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value”.


Cash is the money in the form of currency. Currency includes currency notes and coins. Any currency notes and coins held by an enterprise are part of the term “cash”.

Demand deposit is a type of an account from which funds can be withdrawn at any time without having to inform the bank or depository institution. Most of the checking and saving accounts are demand deposits.

Cash Equivalent

Cash equivalents are investments that can be readily converted to cash. Common examples of cash equivalents include commercial paper, treasury bills, short term government bonds, marketable securities, and money market holdings. An item should satisfy the following criteria to qualify for cash equivalent:

· The investment should be short term. They should mature in less than three months. If they mature in more than three months they will be classified as other investments.

· They should be highly liquid. This means that they should be easily sold in the market. The buyers of these investments should be easily available.

· They should be convertible to known amounts of cash. This means that their market price should be available and this market price should not be subject to significant fluctuations.

· They should not be too risky. There should be very little risk of changes in their value. This means that equity shares cannot be classified as cash equivalents. But preferred shares purchased shortly before the redemption date can be classified as cash equivalents.

In short, cash and cash equivalents mean the cash and those assets which are immediately convertible to cash. Cash and cash equivalents are the most liquid assets of any business. Cash and cash equivalents are very important for the liquidity of a business. A company should have sufficient cash and cash equivalents to meet its urgent liabilities when they fall due.

For saving money and making settlements between legal entities institutions RK banks open bank accounts, which are maintained in tenge and foreign currency and classified as:

- Correspondent accounts - bank accounts that banks and non-bank financial institutions;

- Current and savings accounts - is bank accounts opened for individuals and legal entities, separate divisions of legal entities (their subsidiaries and affiliates).

In accordance with the Law "On payments and money transfers" for the number 237 - 1 point 4-1 Article 21 of 29June 1998, as amended on July 9, 2003, 482-II as amended on 21.07.2011, 466 - IV payments between legal entities in the amount exceeding 1000 monthly calculation indices are performed only on a cashless basis.

In accordance with the Resolution of the Board of the National Bank of Kazakhstan on April 25, 2000, 179 "Rules for the use of payment instruments and cashless payments and money transfers to the territory of the Republic of Kazakhstan" and the Resolution of the Board of the National Bank of Kazakhstan on November 25, 2000 for the number 433 as last amended on 26.03.2012, 108 "On approval of non-cash payments between the client and the bank serving it" approved the following forms of cashless payments:

1) Settlements by payment orders. Payment Order is an instruction subject servicing bank for the transfer of certain amount from your account. Payer provides the bank commission on forms prescribed form. In addition to the bank must submit an invoice confirming the purpose of the payment. Payment order is valid for 10 days, not counting the day of discharge. Payment order made in two copies, and when transferring amounts to the budget in triplicate.

2) Settlements of Payment request - Order. Payment request - Order is the requirement to pay the supplier to the buyer based on the sent to the payer's bank serving settlement and shipping documents, the cost of delivered under the contract goods, works, services rendered. Issued in four copies. With the consent of fully or partially pay the payer makes a payment request - Order signed by the persons authorized to use the account and stamp on all copies and deliver them to the serving pot. If the payer refuses to pay, he is obliged to inform the bank in question within three days, and his bank requirements - order together with the accompanying shipping documents and notification of refusal to return to the supplier.

3) to withdraw funds from the account without his consent (collection order) - is made only by the court, by order of the bank, under the orders of the tax authorities, or in the cases stipulated by law.

Payment payments to the budget based on payment orders and collection orders taxpayers tax authorities carried out by banks on a priority basis on the day of submission to the bank. The Bank shall not delay execution of these orders.

Responsibility for the correctness of the claimant carries penalties. Banks do not consider the objections of taxpayers. Withdraw funds from the accounts without the consent of the payer's bank only original documents or duplicates, but not copies.

Collection orders to withdraw funds without the consent of the payer to the bank shall be within the statute of limitations. Responsibility for this lies with the claimant. The following deadlines ago:

a) for the collection of tax arrears to the budget for legal entities - without lapse of time;

b) writs of execution issued by the courts - 1 year.

4) Settlements using notes. Notes - the payment document is strictly prescribed form containing unilateral single bond. The following types of bills:

a) a promissory note (solo) - a bill that contains an unconditional obligation of the issuer to pay on demand or at a certain time in the future in the bill designated amount of money to the holder;

b) A transfer note (draft) - a bill that contains an unconditional offer (order) of the drawer (the drawer) to a third party (the drawee) to pay the original note holder (payee) or by his order at a certain time in the future, either on demand indicated in the bill amount money.

5) Settlements checks are a way of making payments for which payment is made by issuing a check issuer eponymous payment document the check holder. Checks calculations made ??in accordance with Resolution of the Board of the National Bank of RK "How to apply checks on the territory of the Republic of Kazakhstan" for number 266 of December 5, 1998 and amended on October 13, 2000 at number 390.

3. Accounting for cash on hand

For storage, receiving and dispensing cash each entity has cash. Cashier's office should be isolated and equipped in accordance with the requirements of technical strength and offices equipped with means of protection - fire alarm. All cash transactions are carried out by the cashier, which after reading the order of cash transactions is an agreement to the full individual responsibility.

Accounting for transactions conducted in cash on active synthetic accounts subsection 1010 "Cash in hand."

Accounting for cash on hand is conducted in accordance with the Law "On Accounting and Financial Reporting" from 28.02.07, 234 -111, as amended on 26.12.2012, the entity's accounting policy.

Receiving money in cash provided by receipt cash order 1, signed by the chief accountant. Issuance of money from the cash register style expendable cash order 2, or properly executed payroll application for issuance of money, bills and other documents signed by the director and chief accountant.

Erasures, blots and corrections, even stipulated in cash orders are not allowed. Prescribed receipt cash order and expendable cash order or equivalent documents recorded in the log of credit and debit cash documents (forms CO 3), which opens separately on credit and debit documents separately on.

Accounting of cash transactions in the cashier leads cashbook (Form CO -4), which must be strung together, numbered and sealed with wax; the number of sheets in it are certified signatures of the head and chief accountant. Each sheet cash book consists of 2 equal parts: one of them cashier fills the first instance, it remains in the cash book; second is filled with the front and back through the copy paper. It is a tear-off portion and together with the accompanying vouchers and primary documents handed over to the accounting department as a cashier report.

When a small volume of cash transactions, cash reports be permitted once in 3-5 days. Erasures and corrections unspecified in the book are not allowed. Report cashier surrenders in accounting on the basis of which is filled with journals -order number 1.

Correspondence accounts:

Debit Credit

1010 1030 in the amount of cash received in the current account;

1010 1210,2110 in the amount of revenues;

1010 1250 unused amount of accountable persons put the money in cash offices;

1010 6010 to sell the products for cash;

3350 1010 issued wages;

1250 1010 accountable persons issued money;

1030 1010 put the current account funds with cash.

4. Accounting for the money on current accounts

Current correspondent account is opened on the basis of resolutions of the Board of the National Bank of Kazakhstan on June 2, 2000 for the number 266 as last amended on 26.04.2013, 117 "On approval of the Instruction" On the procedure of opening, maintaining and closing bank accounts of customers in banks of Kazakhstan. "

When opening a current correspondent account under the bank account, the bank agrees to accept the money coming in favor of the client_ the client's instructions to carry out the transfer (Issuance) to the client or third parties to appropriate sums of money and other services provided by the bank account agreement.

Bank account agreement should contain: the subject of the contract; taxpayer identification number; procedure for disposal of the money in the bank; conditions for the provision of services by the bank and the order of payment.

To open a current correspondent accounts for legal entities - residents of the Republic of Kazakhstan in accordance with the Civil Code of the Republic of Kazakhstan (Article 747) must provide:

1) a document with signatures;

2) individual identification number;

3) a document on the state registration of a legal entity;

4) a notarized copy of the statute.

Accounting for the current correspondent account maintained in account 1030, which is reflected in the debit entry or parish loan - disposal or expense. According to accounts of the bank open a personal account in duplicate, and the second is filled with a blueprint and a bank statement received by the client. The documents attached to the extracts shall bear the stamp of the bank. Bank statements are checked against the accompanying documents.

Issuing bank statement made by banks in accordance with the contract. The Bank is entitled to provide transmission services to the customer statements of their accounts electronically.

Current correspondent accounts is closed at the request of the client in the absence of unfulfilled requirements, except for liquidation or reorganization of a legal entity or lack of funds in the account of a legal entity and physical person - more than 1 year. After closing the bank account within 10 days written notice is required to the tax authorities.

At the end of the reporting period, data from the statements recorded in the relevant registers (journals - order number 2.

Correspondence accounts:

Debit Credit

1030 1010 put the current account funds with cash;

1030 1210, 2110 received on current account payments for sold products, works and services rendered;

1030 3510,4410 received on account of the prepayment payments received from customers;

3310 1030 paid bills accepted by suppliers;

1010 1030 in the amount of cash received in the current account;

1610 1030 from current account providers to paid prepayments to suppliers

1030 3010 the current account received bank loans;

3010 1030 from the current account to transfer money to the repayment of bank loans;

3110-3190 1030 from the current account to transfer money to repay its debt to the budget by type of tax

3210,3220 1030 from the current account to transfer money to the repayment of extra-budgetary funds.

5. Accounting for cash on card accounts

1040 on account shall keep records of payment cards. Payment cards - this means access to money through electronic terminals or other equipment that contain information that allows the holder to make payments, withdraw cash, exchange rates and other operations, certain bank to issue such cards. Payment cards are divided into:

1) debit cards - cards enable their holders to make payments up to the amount of money at stake - the account;

2) credit - cards that allow their holders to make payments up to the amount of the loan granted by the bank (within 70% of salary);

3) corporate card - issued to its holder on the basis of its extradition treaty concluded between the Bank and a legal entity within the amount of money on cts-bill, or to the amount of the loan granted.

Correspondence accounts:

Debit Credit

1040 1030 funding cards - account;

1250 1040 payment of business trip from the card account;

7210 1040 payment of business trip from the corporate card.

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