Chap会计学基础实用.pptx

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1、How Much Cash Should a Business Have?CashShort-term InvestmentsReceivablesFinancial Assets第1页/共62页How Much Cash Should a Business Have?AccountsreceivableMarketable securities(short-term investments)Cash(and cash equivalents)Collections from customersCash payments“Excess”cash is invested temporarilyI

2、nvestments are sold as cash is needed第2页/共62页The Valuation of Financial AssetsEstimated collectible amount第3页/共62页CashCoins and paper moneyChecksMoney ordersTravelers checksBank credit card salesCash is defined as any deposit banks will accept.第4页/共62页Combined with cash on balance sheetReporting Cas

3、h in the Balance SheetLiquid short-term investmentsStable market valuesMatures within 90 days of acquisitionCash Equivalents第5页/共62页Not available for paying current liabilitiesReporting Cash in the Balance SheetNot a current assetListed as an investment“Restricted”Cash第6页/共62页Bank agrees in advance

4、to lend money.Reporting Cash in the Balance SheetLiability is incurred when line of credit is used.Unused line of credit is disclosed in notes.Lines of Credit第7页/共62页The Statement of Cash FlowsSummarizes cash transactions for an accounting period.Statement of Cash FlowsIncludes cash and cash equival

5、ents.第8页/共62页Cash ManagementlAccurately account for cash.lPrevent theft and fraud.lAssure the availability of adequate amounts of cash.lAvoid unnecessarily large amounts of idle cash.第9页/共62页Using Excess Cash Balances EfficientlyCash available for long-term investment may be used to finance growth a

6、nd expansion of the business,or to repay debt.Cash not needed for business purposes should be distributed to the companys stockholders.第10页/共62页Internal Control Over CashlSegregate authorization,custody and recording of cash.lPrepare a cash budget.lPrepare a control listing of cash receipts.lRequire

7、 daily deposits.lMake all payments by check.lVerify every expenditure before payment.lPromptly reconcile bank statements.第11页/共62页Cash Over and ShortCash Over and Short is debited for shortages and credited for overages.On May 5,XBAR,Inc.s cash drawer was counted and found to be$10 over.第12页/共62页Ban

8、k StatementsShows the beginning bank balance,deposits made,checks paid,other debits and credits in the month,and the ending bank balance.Bank Statement第13页/共62页Reconciling the Bank StatementExplains the difference between cash reported on bank statement and cash balance in depositors accounting reco

9、rds.Provides information for reconciling journal entries.第14页/共62页Reconciling the Bank Statement Balance per Bank+Deposits in Transit-Outstanding Checks Bank Errors=Adjusted Balance Balance per Depositor+Deposits by Bank (credit memos)-Service Charge-NSF Checks Book Errors=Adjusted Balance第15页/共62页R

10、econciling the Bank StatementAll reconciling items on the book side require an adjusting entry to the cash account.Balance per Depositor+Deposits by Bank (credit memos)-Service Charge-NSF Checks Book Errors=Adjusted Balance第16页/共62页Reconciling the Bank StatementPrepare a July 31 bank reconciliation

11、statement and the resulting journal entries for the Simmons Company.The July 31 bank statement indicated a cash balance of$9,610,while the cash ledger account on that date shows a balance of$7,430.Additional information necessary for the reconciliation is shown on the next page.第17页/共62页lOutstanding

12、 checks totaled$2,417.lA$500 check mailed to the bank for deposit had not reached the bank at the statement date.lThe bank returned a customers NSF check for$225 received as payment of an account receivable.lThe bank statement showed$30 interest earned on the bank balance for the month of July.lChec

13、k 781 for supplies cleared the bank for$268 but was erroneously recorded in our books as$240.lA$486 deposit by Acme Company was erroneously credited to our account by the bank.第18页/共62页Reconciling the Bank Statement第19页/共62页Reconciling the Bank Statement第20页/共62页Used for minor expenditures.Petty Cas

14、h FundsHas one custodian.Replenished periodically.Petty Cash Funds第21页/共62页Short-Term InvestmentsBond InvestmentsCapital Stock InvestmentsCurrent AssetsAlmost As Liquid As CashReadily MarketableMarketable Securities are.第22页/共62页A Principle of Asset ValuationMost short-term investments in marketable

15、 securities are classified as available for sale and appear on the balance sheet at their current market value.第23页/共62页Lets turn our attention to accounts receivable.第24页/共62页Uncollectible Accounts If a company makes credit sales to customers,some accounts inevitably will turn out to be uncollectib

16、le.PAST DUE第25页/共62页Reflecting Uncollectible Accounts in the Financial StatementsAt the end of each period,record an estimate of the uncollectible accounts.Contra-asset accountSelling expense第26页/共62页The Allowance for Doubtful AccountsThe net realizable value is the amount of accounts receivable tha

17、t the business expects to collect.第27页/共62页Writing Off an Uncollectible Account ReceivableWhen an account is determined to be uncollectible,it no longer qualifies as an asset and should be written off.第28页/共62页Writing Off an Uncollectible Account ReceivableAssume that on January 5,K-Max determined t

18、hat Jason Clark would not pay the$500 he owes.K-Max would make the following entry.第29页/共62页Writing Off an Uncollectible Account ReceivableAssume that before this entry,the Accounts Receivable balance was$10,000 and the Allowance for Doubtful Accounts balance was$2,500.Lets see what effect the write

19、-off had on these accounts.第30页/共62页Writing Off an Uncollectible Account ReceivableNotice that the$500 write-off did not change the net realizable value nor did it affect any income statement accounts.第31页/共62页Monthly Estimates of Credit Losses At the end of each month,management should estimate the

20、 probable amount of uncollectible accounts and adjust the Allowance for Doubtful Accounts to this new estimate.Two Approaches to Estimating Credit Losses:1.Balance Sheet Approach2.Income Statement Approach第32页/共62页Estimating Credit Losses The Balance Sheet Approach Year-end Accounts Receivable is br

21、oken down into age classifications.Each age grouping has a different likelihood of being uncollectible.Compute a separate allowance for each age grouping.第33页/共62页Estimating Credit Losses The Balance Sheet ApproachAt December 31,2005,the receivables for EastCo,Inc.were categorized as follows:第34页/共6

22、2页Estimating Credit Losses The Balance Sheet ApproachAt December 31,2005,the receivables for EastCo,Inc.were categorized as follows:第35页/共62页Estimating Credit Losses The Balance Sheet ApproachAt December 31,2005,the receivables for EastCo,Inc.were categorized as follows:第36页/共62页EastCos unadjusted b

23、alance in the allowance account is$500.Per the previous computation,the desired balance is$1,350.Estimating Credit Losses The Balance Sheet Approach第37页/共62页Lets look at another way to estimate credit losses!第38页/共62页Estimating Credit Losses The Income Statement ApproachUncollectible accounts percen

24、tage is based on actual uncollectible accounts from prior years credit sales.Focus is on determining the amount to record on the income statement as Uncollectible Accounts Expense.第39页/共62页Estimating Credit Losses The Income Statement Approach第40页/共62页Estimating Credit Losses The Income Statement Ap

25、proachIn 2005,EastCo had credit sales of$60,000.Historically,1%of EastCos credit sales has been uncollectible.For 2005,the estimate of uncollectible accounts expense is$600.($60,000 .01=$600)Now,prepare the adjusting entry for December 31,2005.第41页/共62页Estimating Credit Losses The Income Statement A

26、pproach第42页/共62页Uncollectible AccountsSummaryAging of ReceivablesEmphasis on Realizable ValueAccts.Rec.All.for Doubtful Accts.Balance Sheet Focus%of Credit SalesEmphasis on MatchingSalesUncoll.Accts.Exp.Income Statement Focus第43页/共62页Concentrations of Credit RiskConcentrations of credit risk occur i

27、f a significant portion of a companys receivables are due from a few major customers or from customers operating in the same industry or geographic region.The FASB requires disclosure of all significant concentrations of credit risk in the notes to the financial statements.第44页/共62页Recovery of an Ac

28、count Receivable Previously Written OffSubsequent collections require that the original write-off entry be reversed before the cash collection is recorded.第45页/共62页Direct Write-Off MethodThis method makes no attempt to match revenues with the expense of uncollectible accounts.第46页/共62页Income Tax Reg

29、ulations and Financial ReportingDirect write-off method required to calculate taxable income.Taxable IncomeFinancial Statement IncomeGAAPGAAPGAAPGAAPAllowance methods better match expenses with revenues.第47页/共62页Internal Controls for ReceivableSeparate the following duties:Maintenance of the account

30、s receivable subsidiary ledger.Custody of cash receipts.Authorization of accounts receivable write-offs.第48页/共62页Management of Accounts ReceivableCredit TermsMinimize Accounts ReceivableExtending credit encourages customers to buy from us.but it ties up resources in accounts receivable.第49页/共62页Mana

31、gement of Accounts ReceivableFactoring Accounts Receivable Credit Card Sales 第50页/共62页A promissory note is an unconditional promise in writing to pay on demand or at a future date a definite sum of money.Notes Receivable and Interest RevenueMakerthe person who signs the note and thereby promises to

32、pay.Payeethe person to whom payment is to be made.第51页/共62页PROMISSORY NOTE Location Date after this date promises to pay to the order of the sum of with interest at the rateof per annum.signedtitleMiami,FlNov.1,2005Ninety daysPorter CompanyJohn CaldwellHall Company$10,000.0012.0%CFO,Porter CompanyNo

33、tes Receivable and Interest RevenuePorter Company is replacing an existing Accounts Receivable with this Note Receivable with Hall Company.第52页/共62页On November 1,2005,Hall Company would make the following entry.Notes Receivable and Interest Revenue第53页/共62页Interest is a charge made for the use of mo

34、ney.The borrower incurs interest expense.The lender earns interest revenue.Interest rates down!Notes Receivable and Interest RevenueLender第54页/共62页 The interest formula includes three variables:Interest =Principal Interest Rate TimeWhen computing interest for one year,“Time”equals 1.When the computa

35、tion period is less than one year,then“Time”is a fraction.Notes Receivable and Interest RevenueFor example,if we needed to compute interest for 3 months,“Time”would be 3/12.第55页/共62页What entry would Hall Company make on December 31,the fiscal year-end?Notes Receivable and Interest Revenue$10,00012%6

36、0/360=$200第56页/共62页What entry would Hall Company make on the maturity date?Notes Receivable and Interest Revenue$10,00012%90/360=$300第57页/共62页If Porter Company defaulted on the note,Hall Company would make the following entry on the maturity date.Notes Receivable and Interest Revenue第58页/共62页Financi

37、al AnalysisAccounts Receivable Turnover RateThis ratio provides useful information for evaluating how efficient management has been in granting credit to produce revenue.Net Sales Average Accounts Receivable第59页/共62页Financial AnalysisAvg.Number of Days to Collect A/RThis ratio helps judge the liquidity of a companys accounts receivable.Days in Year Accounts Receivable Turnover Ratio第60页/共62页End of Chapter 7第61页/共62页感谢您的欣赏！第62页/共62页