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Flashcards in Ch 7 Appendix And IFRS Insights Deck (22):

Internal control

Used to safeguard cash and ensure accuracy of
accounting records


Collection float

Difference btw amount on deposit according to company's
Records and amount of collected cash according to
bank record


Lock box accounts, advantages?

Company rents local post office box and authorizes
Local bank to pick up remittances mailed to that
Box number and credit to company's acct of collections

Accelerates availability of cash and improves internal
Control of cash


General checking account

Principal back account of most companies

Company cycles all transactions through it


Imprest bank accounts, example of use?

Account acts as clearing account for large volume of checks
Or for specific type of check

Makes a specific amount of cash available for limited purpose

Example. Used for petty cash disbursement


Cash Over and Short

Used when petty cash fund. Fails to prove out


Cash proves out short

Sum of receipts and cash in fund is less than Imprest amount


5 reconciling items

1 Deposits in transit
2 outstanding checks
3 bank charges
4 bank credits
5 bank or depositor errors


Deposits in transit

End of month deposits of cash recorded on depositor's
Books in 1 month are received and recorded by bank in
Following month


Outstanding checks

Checks written by depositor are recorded when written
But may not be recorded by bank til next month


Bank charges, 4 examples

Charges Recorded by bank against depositor's balance
for items:

Bank services, printing checks, not sufficient funds,
safe deposit box


Bank credits, 2 examples?

Collections or deposits by bank for benefit of depositor

Ex. Note collection, interest earned


Bank or depositor errors

Errors on either part of the bank or depositor that cause
Bank balance to disagree with depositors book balance


Bank reconciliation

Schedule explaining any differences btw bank's
And company's records of cash


2 sections of reconciliation

Balance per bank statement

Balance per depositor's books


What do companies prepare for the "Balance per depositor's books" section?

Adjusting journal entries for addition and deduction
Items appearing in the "balance per depositor's books" section


Impairment loss of loan calculation

Impairment loss =
investment (principal + accrued interest)
- effective future cashflows discounted at loan's historical int. rate


3 Similarities in accounting procedures for cash and receivables with GAAP and IFRS?

1 Accounting and reporting related to cash is same
Also use same definition for cash equivalents

2 both report cash and receivables under current assets

3 both require loans and receivables to be accounted for
At amortized cost adjusted for allowances for doubtful accts


5 Differences btw GAAP and IFRS related to cash and receivables?

1 IFRS report cash and receivables as last items in current
Assets section
2 IFRS does not standards for reporting receivables with
different characteristics separately
3 slight difference in fair value option under IFRS
4 under IFRS bank overdrafts are reported as cash
Under GAAP bank overdrafts are reported as liabilities
5 differ in criteria used to account for transfers of receivables





IFRS Impairment evaluation process

IFRS requires companies to asses their receivables
For impairment

While GAAP does not


3 parts IASB requires in the impairment evaluation process?

1 receivables that are individually significant are
Considered separately
2 receivables assessed + not considered impaired are
Included in group of assets with similar credit risk
characteristics and collectively assed for impairment
3 receivables not individually assess are collectively
Assed for impairment