Describe the following accounts and the types of items that are included in them. Cash Temporary...
- Describe the following accounts and the types of items that are
included in them.
- Cash
-
- Temporary investments
-
- Cash equivalents
-
- Restricted cash
-
- Bank over drafts
Homework Answers
| Account | Description | Types of Items |
| Cash | Cash in hand for the business | Cash in hand |
| Temporary Investments | Investment securities that are kept temporary which can be sold | Government bonds, |
| as and when funds are required for working capital requirements. | Money market instruments, | |
| Certificate of deposits (CD), etc | ||
| Cash equivalents | Short-term (3 months) investment securities which are highly | Commercial papers, |
| marketable are called cash equivalents. They are highly liquid | Treasury bills, | |
| like cash and hence improve the liquidity of the company. | Other marketable securities, etc | |
| Restricted cash | As the name suggests, the money held as restricted cash can | Escrow account balances, |
| be only utilised for a specific purpose. Hence, it is not readily | Minimum balance on bank accounts | |
| available for the company. | Refundable deposits, etc | |
| Bank overdrafts | It is a facility given to certain customers (current account holders) | Bank Overdraft |
| to withdraw in excess of balance available in the bank account. | ||
| Note: The first four are current assets while bank overdrafts is a current liability. |
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Describe the following accounts and the types of items that are
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