Anonymous
Anonymous asked in 商業及金融稅金香港 · 6 years ago

bafs fixed deposit question!

if the trial balance has a fixed deposit (3 months) account $ 600000 on31 March 2012, it should be directly write in income statement for the year ended 31March 2012$600000?It also should be written in balance sheetcurrent assets$600000??

2 Answers

Rating
  • W
    Lv 5
    6 years ago
    Best Answer

    - Cash and Cash Equivalents are resources and are reported as Assets.

    - In this case, the Fixed Deposit $600,000 (3 months) should be reported

    on the Balance Sheet as at March 31, 2012.

    It is considered as an Cash Equivalent item, should be shown on the

    Balance Sheet, grouped under Current Assets.

    - Therefore, Current Assets $600,000 should NOT be reported on

    Income Statement.

    - Cash Equivalents: are low risk investments that can be converted into

    cash within 90 days or less.

    e.g. Short Term Deposit (30 days, 60 days, 90 days), Treasury Bills.

    Companies invest in cash equivalents in order to earn higher interest

    than can be earned in bank savings or chequing accounts.

    WK

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