Cash and Cash Equivalents
Code: 1110Account Information
| Financial Statement | Statement of Financial Position |
| Normal Balance | Debit |
Definition
This account includes physical cash (notes and coins), demand deposits (current accounts), and short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Such investments must have a maturity period of three months or less from the date of acquisition. Restricted cash for more than three months is not included.
Sub-accounts
Cash in Hand
Bank Account
📐 IFRS vs US GAAP Accounting Treatment
❓ Frequently Asked Questions
A: Yes, cash is classified as a current asset.
A: Cash has a debit normal balance.
A: There is no fixed rule, but the cash balance should be sufficient only for minor daily expenses. It is preferable to keep the minimum possible amount and transfer any excess to the bank for safety and to earn returns. Limits vary by company size and business nature.
A: Cash includes currency, coins, and demand deposits. Cash equivalents are short-term investments (maturity of 3 months or less) that are highly liquid, convertible to known cash amounts, and have low risk, such as treasury bills and short-term certificates of deposit.
A: Cash and cash equivalents are presented at the beginning and end of the period on the Statement of Cash Flows. Any change in the cash balance during the period represents net cash flows from operating, investing, and financing activities. Any restricted cash must be disclosed separately.
A: Cash and cash equivalents are available for immediate use in operating activities. Restricted cash is not available for immediate use due to legal or contractual restrictions (e.g., security deposits, bank guarantees).
A: Under IFRS, it may be offset against cash if it is repayable on demand and part of daily cash management. Under GAAP, it is usually presented as a liability (current liability).