CHAPTER 1: CASH AND CASH EQUIVALENTS  refers to the currency and coins which

are in circulation and legal tender.

GUIDELINES ON HOW TO STUDY IA (Circulation means nasa isang
1. Know the applicable Accounting community which is peso. And umiikot
Standards ikot siya sa community and tanggap ng
2. Know the Scope of the applicable mga tao. On the other hand, legal
Accounting Standards. tender means pag inabot mo sa isang
3. Know the important Definition of Terms tao, automatically na okay yan.
4. Know the Recognition (a) Initial and; (b) Tinatanggap ng kahit sino kasi
Subsequent (kailan ba dapat irecord sa pinapayagan ng batas. Ang legal tender
general journal or magreflect sa financial sa pilipinas ay peso).
statements?) (initial recognition- paano
mo irrecord sa simula? // subsequent CASH
recognition- magbabago ba? Yung  includes money and any other negotiable
original na nirecognize mo siya tapos instrument that is payable in money and
paglipas ng panahon magbabago ba?) acceptable by the bank for deposit and
5. Know the Measurement (a) Initial and; (b) immediate credit. (Money- bills and
Subsequent (Historical cost, face value, coins // negotiable instrument-
and so on) convertible into cash such as check //
6. Know the essential Journal Entries immediate credit- means ikaw ang may-
7. Know the Presentation (current assets? ari kasi credit nila or payable nila sa iyo
Current liab? Shareholder’s equity?) yon. Payable ng bank sa iyo kasi depositor
8. Know the Disclosure requirements (ano ka).
ba yung mga important na need malaman  is money or its equivalent that is readliy
ng mga users ng financial statements available for unrestricted use.
regarding sa account na nirecord? (Unrestricted use- pwede mong ipambili,
Example: baka merong nakaloan ka) pwede mong ipambayad, pwedeng
ipautang, pwedeng gamitin kahit saan.)
APPLICABLE ACCOUNTING STANDARDS
No specific accounting standard deals with UNRESTRICTED CASH
“CASH” but governed with the following:  Hindi ka pwedeng pagbawalan kung saan
o Philippine Financial Reporting mo gustong gamitin.
Standards (PFRS) 9- Financial  Cash is the most liquid asset. Liquidity
Instruments means your ability to go anywhere. To do
o Philippine Accounting Standards (PAS) what you want. Therefore, malaya ka and
32- Financial Instruments – disclosure wala kang restrictions.
and presentation
o PAS 1- Presentation of Financial When cash is restricted? More than 12mos
Statements after the end of reporting period.
o PAS 7- Statement of Cash Flows
Kapag ang cash ay may restriction, ibig
MONEY sabihin hindi pinapagamit sa iyo. Hindi mo
 Is the standard medium of exchange. dapat siya i-identify as cash. Ihihiwalay mo
(Why? For example in barter system, siya as aprt of other current assets.
natutloy yung palitan ng gold and cash
because of a piece of paper called CASH ITEMS INCLUDED IN CASH
check. Meaning natutuloy yung palitan a. Cash on Hand (CUTCMoBa)
or exchange because of that check.)  Meaning nasa iyo pa.
 Customer’s checks awaiting deposit bayaran si person B kasi may account
(yung company may hawak na check siya ron, guaranteed na may fund
awaiting for deposit, idedeposit mo among all checks). (document na
pa lang sa bank. Part pa rin yon ng sinulat ni bank. Parang manager’s
cash on hand. Kasi wala pa naman sa check, cashier, and traveler in a sense
C bank. Nasa bank yon nung customer. na may fund na rin. Nga lamang mas
Pero nasa iyo na yung check.) mabigat ang guarantee kasi ang nag-
(binigyan ka ng customer ng check guarantee na mayrong fund ay yung
and di mo pa nadeposit. Hindi ka pa bank. Yung bank na mismo nagsabi
sure kung may fund or wala. No na may fund yan. Ganon siya kabigat
assurance among all checks.) at kaganda. Bali tatalbog lang ito).
Undeposited cash collections
(currencies such as bills and coins) (di b. Cash in bank (CST)
U pa nadedeposit, literal na nasa iyo)  includes demand deposit or checking
(di pa nadedeposit pero nakolekta na. account and saving deposit which are
Dito pumapasok yung bills and coins.) unrestricted as to withdrawal.
Traveler’s check (yung isang tao
nagpunta sa bank. Nagpa approve na
Current account / checking account /
yung traveler’s check ay may pondo.
demand deposit / commercial deposit
T Automatic na may fund. Traveler’s
-generally non-interest bearing
check, check na dala ng traveler.
-withdrawable by checks against bank
Dala-dala ng traveler na patunay na
(Checking accout or demand deposit-
may fund.)
hindi mo dineposit yung money sa
Cashier’s / Official / Treasurer’s /
bank para kumita. Hindi dahil sa para
Manager’s checks (basta checks na C
mag-ipon ka. But rather gusto mo
may fund. Identified as cash. Basta
siyang gamitin sa mga transaction kasi
hindi tatalbog) (Manager’s check-
nga mas maganda na may isa kang
automatic na may fund. Check na
document pambayad sa malalaking
approved na wherein it has a fund.
value. Demand means anytime pwede
Sigurado ang business na may fund
C mong kunin yung deposit. Purpose nito
ito. May assurance. Manager ang
is para gamitin araw-araw.)
nag approve kasi manager’s check.)
Savings deposit (Savings Account-SA)
(Cashier’s check- same with
-generally interest bearing
manager’s check. Iba lang yung nag
-depositor is issued an ATM card or
approve. Automatic din na may fund
passbook
pero ang iba lang nito sa manager is
-withdrawable in ATM station or
cashier ang nag approve.)
within the bank
Postal money orders (a demand
(Savings deposit- savings means ipon.
credit instrument issued and payable
S Yung savings/pera mo is nilalagay mo
by a post office) (kapag ippresent mo
sa bank para mag save. Purpose nito is
is convertible into cash.) (galing sa
M mag-ipon. Ito yung isang basic na
other financial institutions. For
o account sa bank wherein may
example sa western union, sa gcash.
passbook ka and atm. Pag nagdeposit
Parang check na rin pero hindi galing
ka gagamit ka ng passbook. Pag
sa bank. Ina approve na kasi may
withdraw is atm. Pera na nakatago sa
fund na, na hindi galing sa bank.)
bank na kumikita ng interest.)
Ba Bank drafts - a written order
Time deposit (restriction: bawal
addressed to the bank to pay an
T gamitin araw araw, may certain period
amount of money to the order of the
of time lang para mawithdraw).
maker. (For example: si Person A
binigyan si bank ng instruction na
 current din ang classification. Kaya
COH AND CIB – IMPORTANT NOTE! identified as cash).
 Difference of cash on hand and cash in Revolving fund (fund that is used for
bank is location. Location kung nakanino R limited or specific purpose set by
ang pera. management)
Int Interest fund
OTHER IMPORTANT NOTE! Petty cash fund (for small and
Pe
miscellaneous disbursements)
 Ang check is convenient dahil nagagamit
Dividend fund (yearly nagddeclare ng
mo siya sa any transcation.
dividends. May investors ka. Kaya ka
 Pag binigyan ka ng check worth 1M. tapos may investors kasi nageexpect yan na
ang laman lang ng bank mo is 500k. 500k magkaron ng share sa kinita mo sa
lang pwede mong mawithdraw. Isa ito sa company. Naghihiwalay ka na ng fund
disadvantage ng check kasi promise lang Di for them. For current purposes pa rin).
to. Mas maganda pa rin ang cash. Bali (pag nagdeclare ka ng cash dividends,
tatalbog yung check kasi di enough yung hindi mo pinapatagal ng sobrang
laman sa bank. tagal. Alangan namang after 3 years
mo ddeclare. So basically for current
c. Cash fund operation lang ito.)
 set aside for current purposes. (Cash Travel fund (travel fund ng employees
T
fund are those with restriction for or managers, particularly mga boss)
current operation. If the restriction is for Tax fund (monthly, quarterly, and
P yearly) (hindi pwedeng galawin kasi
current operation, cash fund yon. Cash
pambayad ng tax.)
fund = cash. Cash pa rin. Fund means
pondo, may pinaglaanan.)
2. Noncurrent purpose- inihihiwalay mo
yung fund mo. Dahil may long term
1. Current purpose- classified as cash such as
liabilities kang babayaran. Or kaya nagset
salary fund or payroll fund, tax fund
aside ka para sa pagpapagawa ng building.
(quarterly, monthly, annually)
You cannot classify it as cash.

For current operations (CP 2 RIntPeDi T 2 ¿

For noncurrent operations ( P2 ACIS ¿
These are part of noncurrent assets and
Change fund (panukli sa tindahan) (for
SHOULD NOT BE INCLUDED as part of Cash.
example: in a sari sari store. Yung
Examples are as follows:
lalagyanan wherein nandon yung
coins mo which is panukli mo. After ng
isang operation. Yung mga perang Generally, noncurrent
C iyon is idedeposit ba? No. kasi hindi ka investment but if the related
pwedeng mawalan ng barya, di ka liability is current, the fund is
pwedeng mawalan ng panukli. Ang included as cash. (pag ikaw
restriction ng mga baryang yon ay for naghihiwalay ng fund pero di
panukli. the restriction is for current Pension mo pa naman babayaran
P
operation.) Fund currently, inilalagay mo yan
Payroll fund (salary and wages of sa financial institution para
employees) (pambayad ng salary. kumita. Kaya ang tawag sa
P kanya ay noncurrent
Restriction ng fund na ito is for
pambayad ng salary.) investment. Halimbawa
p Purchasing fund (for purchasing of nilagay sa insurance).
inventories) (inventories is current, P Preferred Noncurrent investment
therefore yung inallot na fund is Redemption unless the preferred share
 has a mandatory redemption Classification of cash fund as current or
and if redeemable. noncurrent should be PARALLEL to the
(redemption means buy classification applied to the related liability.
Fund
back. Bibili ka ulit kasi (kapag ang babayaran mo ay current, dapat
required. Kaya naghihiwalay ang classification ng fund ay current. Pag ang
ng fund for that.) babayaran mo ay noncurrent, dapat hindi mo
Always noncurrent even if na siya isasama sa cash at maigiging
Acquisition expected to be disbursed
noncurrent investment na siya. Kaya parallel).
of Property, next year. (naghiwalay ka ng
A
Plant and fund pambili ng property,
Equipment one year or less, part pa rin Thus, an entity should be reclassify such
ng noncurrent). noncurrent asset if the related liability
Noncurrent investment (for becomes current. (Ex. May utang ka, yung
ex: biglaang gastos ang utang mo is for 5 years and one time payment
Contingent company kung sakaling lang. ang ginawa mo is naghiwalay ka ng
C
Fund nagkasunog. Contingent pondo para bayaran mo. Parang nag iipon ka
means di mo alam kung ganon. Pag nag due na siya, pag dumating na
kelan mo magagastos.) yung 5th year. Ngayon, habang wala pa yung
Noncurrent investment (pag 5th year, noncurrent pa ang classification. Pero
nagseparate ka ng kapag babayaran mo na siya, isang taon na
Insurance insurance, normally pang lang. magiging current na ang classificaiton
I
Fund long term. Pwedeng naka
ng utang mo. Therefore, kailangan mo ng i-
insure ka ng building,
reclassify yung fund mo na inidentify mo as
property, employees)
noncurrent asset. Ililipat mo na siya sa current
Noncurrent investment, if
the related bonds payable is as part of cash. Just make sure na unrestricted
current, the fund is included pa rin.)
as cash. (naghiwalay ka ng
fund kasi may long term ka CASH EQUIVALENTS
ng utang. Normally hindi  PAS 7 Statement of Cash Flows, paragraph
bumababa ng 5years ang 6, defines cash equivalents as short-term
bayad. Naghihiwalay ka ng and highly liquid investments that are
fund para pambayad ng readily convertible to known amounts of
Sinking
S interest. Kasi nangutang ka cash and which are subject to an
Fund
syempre may interest. Ang insignificant risk of changes in value.
tawag don ay sinking fund.
(Easily convertible into cash. At di ka
Kasi everytime na
mangangamba na magbabago yung
nagbaabyad ka ng interest,
amount or value niya.) (liquid- mabilis
lumulubog yung fund mo.)
(bonds payable is pang makabayad ng mga utang na short term.
matagalang utang normally Highly liquid- anytime pwedeng iconvert
5 years ang pinakamaikling into cash. Insignificant risk- hindi mo
panahon). mararamdaman yung any change of
value. Kung bumaba man, sobrang
Note: pag ang problem is silent (means hindi konting-konti lang ang ibinaba.)
sinabi), noncurrent pa rin yung noncurrent
funds, unless otherwise stated. The standard further states that only highly
liquid investments acquired 3 months or less
before maturity can qualify as cash
CASH FUND - IMPORTANT NOTE! equivalents. (Kapag meron kang investments
na ang duration is 3 months or less. Cash
equivalent yon. Pag may investment ka na invested/acquired for 3
good for 1 year. Hindi mo siya macclassify as months or less before equivalents
cash equivalents. Macclassify mo siya as maturity date
short-term investment.)
CASH FUND - IMPORTANT NOTE!
(Kapag may short term investment ka. Binili 1. Ang pinag-uusapan natin dito is KUNG
mo for 1 year. Ngayon 3 mos or less na lang KAILAN BUMILI / DATE OF PURCHASE
siya bago mag mature. Kumbaga pwede mo which should be three months or less.
na iconvert into cash. Hindi mo pa rin Kapag binili mo for 3mos, 2mos or 1mo.
macclassify as cash equivalent. Short-term Cash equivalent yan. Pero pag binili mo
investment pa rin siya.) siya more than 3mos. Short term
investment lang.
EXAMPLES OF CASH EQUIVALENTS
1. Time deposit (deposit na mawwithdraw in For example, nabili mo is 5 years ang
a certain period of time.) maturity pero nabili mo naman siya
2. Money market instrument or commercial magmamature na which is 3 months or
paper (investments na ini issue ng less. Cash equivalents pa rin siya.
businesses or private entities).
3. Treasury bills, treasury notes and treasury 2. If the item cannot be included as Cash
bonds Equivalent because it did not qualify the
4. Redeemable preference shares with cut-off time period (i.e. 3 monts), it will
mandatory redemption period always be classified as INVESTMENTS
(short-term or long-term) depending on
Preference shares with specific the period up to maturity.
redemption date:
 Acquired three months before 3. If the problem is silent with regard to:
redemption date- cash equivalents a. Treasury note and bonds- assumed
 Acquired for more than three months noncurrent investments (word na
before redemption date- current treasury is sa government. Nag iinvest
investment ka sa government. Bumili ka sa
government ng bonds. Kasi nag iissue
IF THE ITEMS MENTIONED ng bonds si government. Nag eexpect
FROM THE EXAMPLES OF TREATMENT ka na bayaran ka ng interest. kasi
CASH EQUIVALENTS ARE: kikita ka kapag nag invest ka. For long
1. Originally period of time)
invested/acquired for b. Cash in money market account - cash
more than 3 months and cash equivalents (cash in money
before maturity date: market account- easily convertible
into cash).
a. Remaining term is 3 c. Time deposit- cash and cash
months or less from Short-term
equivalents
the reporting date investment
b. Remaining term is
EQUITY SECURITIES/INVESTMENTS
more than 3 months Short-term
but within 1 year investment Generally cannot be classified as cash
c. Remaining terms is equivalents because equity securities do not
more than 1 year Long-term have a maturity date (with the exception of
investment redeemable preference shares). (equity
2. Originally Cash securities means may investment ka sa stocks
or equity. Either short term or long term General Rule: we measure cash initially
investments ito mag aappear. Kasi no and subsequently at face value.
duration ang equity. No time period.).
 Cash maintained in a bank undergoing
PRESENTATION OF CASH bankruptcy is excluded from cash and
Current Assets. Cash is the first line item in presented as receivable measured at
current assets. realizable value.
(Pwedeng hindi maging face value ang
MEASUREMENT OF CASH measurement, but rather magin
 Cash is measured at face value. Estimated Realizable/Recoverable Value.
(Measurement means paglalagay ng For example, yung dineposit mo sa bank
value. Face value, yung nakikita sa worth 50k. then nagsarado yung bank
mismong cash. For ex: 100 peso, 100 peso and di mo na raw pwedeng ma-withdraw
siya, not 50). ito at face value. 40k na lang daw pwede
mong ma-withdraw. Hindi mo na ma-
Cash xxx <--- (measurement yan, memeasure yung cash at face value, but
yung paglalagay ng account). rather at Estimated Realizable Value na.
 Cash denominated in foreign currency is tatanggalin mo na siya sa cash at
translated at the current exchange rate as ippresent mo na siya as receivable
of reporting date. (as of december 31, measured at realizable value. Why
2020 may $100 ka. Magkano ang palitan receivable? Eh kasi babayaran ka nga ng
ng dollar na yon sa ARAW na yon). insurance, once nabayaran ka na that is
the time na irrecognize mo na siya as
If you have foreign currency, you have to cash. Pag nareceive mo debit cash and
convert and the measurement is current credit receivable measured at realizable
exchange rate. value. Pero until such time na hindi mo pa
narreceive yung value non. It should be
Current Exchange Rate- kung magkano part of receivable measured at realizable
yung value nung time na magcconvert ka. value.)
Yun yung susundin mo. For example:
January 1 (value of dollar to peso = BANK OVERDRAFT
48php) January 2 (value of dollar to peso A bank overdraft is presented as a current
= 50php) liability, unless it qualifies to be offsent
Today is January 2, anong value ng dollar against cash. In short, negative balance in the
ang icconvert mo? 50php, because bank account. (Check drawn more than the
CURRENT, kung anong value nung january deposited amount. Not legal in the
2, yun ang susundin mo.) philippines. Not legal by law makakaencash ba
siya? No, ang pwede lang ma encash is kung
2 periods of measurement magkano yung value sa bank. fBali tumalbog
yung check. Nakakadamage ito ng financial
relationship dahil nag-issue ng talbog na
Initially subsequently check.)
For example, 1M yung eencash dapat, pero
(Magkano siya (Magkano siya
800k lang laman ng bank. Tatalbog yung
nung una mo paglipas ng
check.
siyang makita.) panahon.)
Pwedeng magkaroon ng overdraft kung may
relationship na si depositor at bank. Encash
yung 800k, then deposit ulit ng 200k. yung at di na pinakita as part of current liability. So
200k is liability yan. Current liability. cash yan).

Bank A= (200,000) bank overdraft

Bank B= 1,000,000 COMPENSATING BALANCE (MAINTAINING
Bank C= 2,500,000 BALANCE)
 Compensating balances that are legally
Whenever there is an overdraft, allowed ba restricted as to withdrawal by the
ang offsetting? (offsetting isa negative, isa borrower are excluded from cash. (may
positive, ino offset yung negative sa positive) agreement)
there is NO offsetting allowed.
If the releated loan is:
The presented cash is P3,500,000 and not a. Short-term- presented as cash held as
P3,300,000 because there is no offsetting. Kasi compensating balance (current
part of current liability yung -200k. receivable.)
b. Long-term- presented as cash held as
Exception: (pwede i-offset when) compensating balance (noncurrent
1. Different banks- current liabilities or receivable.)
netted against other banks if
immaterial. (pwedeng mag offset if  Compensating balances that are not
immaterial. immaterial means hindi legally restricted as to withdrawal by the
malaki ang epekto. Maliit lang. it can borrower are included from cash. (part of
be ignored. Inconvenient kung cash pa rin)
iclassify as liability) (netted or
deducted means reducing credit or  Whether restricted or not, compensating
reducing the negative). balances are disclosed in the notes.
2. Same bank- can be netted with
account with positive amount but FOR EXAMPLE: Nangutang ka sa bank.
cannot be offset against restricted Pinautang ka ng 10M. hindi niya buong
account. (as long as yung isang bank is ibibigay yon. Magkakaroon ng maintaining
hindi restricted, pwedeng mag offset. balance. Yung deposit sa bank ay dapat hindi
On the other hand kapag restricted bababa sa 200,000. Yung 200,000 is yung
yung bank na yon, di pwedeng mag compensating balance sa usapan niyo. Yung
offset. Definitely, ipapakita mo siya as 200,000 is restriction.
part of current liability at hindi mo Restriction for compensating balance:
imminus). 1. Formal- seryoso yung restriction.
Hindi siya magiging cash. But rather
Bank A that is held for compensating balance
(200,000) current account as long term investment. Kasi nga
800,000 savings account yung restriction is real. Yung banta is
=600,000 cash totoo.
2. Informal- parang panakot lang.
Bank overdraft netted from cash in bank simpleng kasunduan lang.
Bank overdraft that was netted or deducted mawiwithdraw anytime. Can be
from cash in bank but should be presented as considered as cash.
current liability should be added back to
compute for the correct balance of cash in
bank. (nag offset at nag minus na lang sa cash
If the treatment is silent, the compensating A/P xxx
balance is cash (informal or not legally
restricted). POSTDATED CHECKS and UNRELEASED
CHECKS
UNDELIVERED OR UNRELEASED CHECK  Postdated checks received from
By the term undelivered, supposedly ay customers are excluded from cash. (For
ibabayad mo siya, pero hindi mo siya naibigay example: ako si customer and binigyan
sa dapat na makakatanggap. Nagawan na ng kita ng postdated checks ngayon August
check, pirmado na pero di pa nabibigay sa 23. Pero ang nakalagay doon ay august
pagbabayaran. 28 pa. ibig sabihin, hindi pa yon
convertible into cash. That is why hindi
May payable ka sa kanya, kapag magbabayad siya pwedeng isama as cash. Mananatili
ka na: yong accounts receivable sa customer.
Since di mo pa na eencash. May utang pa
A/P xxx si customer sa iyo, sa supplier.)
CIB xxx
 Postdated checks drawn are included in
Adjust kapag hindi pa magbabayad kapag di cash. (kapag ikaw customer, ang
mo nadeliver kasi di ka nawalan ng pera, nagbigay ng postdated checks sa supplier.
simply reverse the entry kasi di ka naman Hindi pa macconsider yon as cash sa
talaga nagbayad ng pera (REVERTED BACK TO supplier. Pero ikaw as a customer,
CASH): kasama pa yon sa cash mo. Kasi di pa
CIB xxx nawwithdraw ni supplier).
A/P xxx  Unreleased checks drawn are included in
cash. (di pa naibibigay sa pagbibigyan
POSTDATED CHECKS yung check, included pa rin sa cash. Pero
For example, today is Nov 12, nilagyan mo once na naibigay mo na, di na included sa
yung check ng date na Nov 18. Nov 12 yung cash mo yon. Released check na ang
check is nasa customer na. Postdated check, tawag).
kasi yung date ng check is higher or later than
the date today. Hindi ka pa bayad ng nov 12 STALE CHECK/CHECKS LONG-OUTSTANDING
kasi di pa niya pwedeng mawithdraw, since Check na hawak ko na nasira na. lumipas na
ang nakalagay sa check is nov 18. Bali nov 18 yung mahabang panahon, wala siyang nagawa
ka pa macconsider as paid. Hindi ito cash out sa check niya. Di na pwedeng encash.
since yung check is at a later date.
*YOU WILL REVERT IT BACK TO CASH (kasi nga
Pag magbabayad ka na: antagal tagal na sakin yung check. Di na yon
A/P xxx tatanggapin ng bank. Nung nag entry ako
CIB xxx before nung binayaran kita ng dr a/p and cr
cash, dahil naging stale na nga siya, ibabalik
Whenever you have a postdated check, hindi ko yon. Ang point lang dito is bumalik sa
pa ito totong payment, may cash ka pa rin kasi cash).
hindi pa niya pwedeng ma withdraw, sa nov
18 pa. kaya irreverse mo yung entry. Magiging If Material
ganto na yung entry kapag dumating na yung Cash xxx
date and means nakapagbayad na: Accounts Payable xxx

CIB xxx If Immaterial

Cash xxx ba kailangang kontrolin ang cash? Basically
Miscellaneous income xxx iniiwasan natin na magkaron ng theft
(nakawan) or misappropriation (ginagamit
Patunay na naconvert na into cash ni supplier yung fund for other purpose other than for
yung check. Kaapg nakareceive si customer ng business purposes. For example ginagamit for
check na may stamp na paid. personal use, lalo na kung walang control sa
pera). Kaa delikado talaga sa isang business na
lahat ng pera nila is cash on hand. Kasi
pwedeng ma tempt yung custodian
(naghahandle ng pera) na magamit siya for
RECOGNITION whatever purpose.
Means kailan ba siya aappear sa journal? Sa All receipts/collections should be deposited in
financial statements? Kailan ba dapat irecord the bank intact. On the other hand, all
si cash and cash equivalents? disbursements/payments should be made by
 Applying the recognition of PAS 1 means of check EXCEPT for petty expenses for
(Presentation of Financial Statements) example transpo expense.
Recognized an assets when:
1. It is probable that the future PETTY CASH FUND
economic benefits associated with the It is the money set aside to pay small
asset will flow to the enterprise; and expenses which cannot be paid conveniently
(probable means more than 50% yung by means of check.
chance na mangyayari)
2. The cost of the asset can be 2 METHODS OF HANDLING THE PETTY CASH:
measured reliably. (reliable means 1. Imprest Fund System- is the one usually
merong basis yung measurement). followed in handling petty cash
transactions. (hindi nirerecord everytime
MEANING OF RECOGNITION OF may movement in the fund but rather
ASSETS (FROM 1 AND 2) pinagsasama-sama na. hihintayin muna
Kapag may papasok na economic lahat ng receipt bago maliquidate).
benefits at probable yon and then
measured reliably, you will recognize 2. Fluctuating Fund System- checks drawn to
cash and cash equivalents. replenish the fund do not necessarily
equal the petty cash disbursement.
 Applying the recognition definition of (everytime there is a fluctuate or
PFRS 9 (Financial Instruments) movement in the fund, nirerecord mo na).
(financial instruments means may
kinalaman sa usaping financial or FLUCTUATING FUND
IMPREST FUND SYSTEM
cash). SYSTEM
A. A check is drawn to establish the fund
When the entity becomes a party to Petty cash fund 5k Petty cash fund 5k
the contract or when the transfer of Cash in bank 5k Cash in bank 5k
resources transpired. (transpired B. Payment of expenses
means nangyari na talaga). Expenses
Memorandum entry only
Petty Cash Fund
IMPREST SYSTEM C. Replenishment of petty cash payments
Expenses xxx Petty cash fund xxx
-system para magkaron ng control when it
Cash in bank xxx Cash in bank xxx
comes to all cash receipts (pagpasok/inflow)
D. To adjust the unreplenished expenses
and disbursements (paglabas/outflow). Bakit
 Expenses xxx
No adjusting entry
Petty Cash Fund xxx
E. Increase in the fund
Petty cash fund xxx Petty cash fund xxx
Cash in bank xxx Cash in bank xxx
F. Decreased in the fund
Cash in bank xxx Cash in bank xxx
Petty cash fund xxx Petty cash fund xxx

Replenishment- nilalagyan mo ulit yung

nabawasan.

ACCOUNTING FOR CASH SHORTAGE OR

OVERAGE

SHORTAGE OVERAGE
Cash Short/Over xxx Cash xxx
Cash xxx Cash Short/Over xxx
IF CHARGEABLE TO IF FOUND AS MONEY OF
CUSTODIAN THE CUSTODIAN
Due from cashier xxx Cash Short/Over xxx
Cash Short/Over xxx Payable to custodian xxx
NO CAUSE IDENTIFIED NO CLAIM
Loss from cash shortage Cash Short/Over xxx
xxx
Cash Short/Over Miscellaneous income xxx
xxx

In reality, chargeable talaga sa custodian.