Identities Problems: For 2530, prove that the given equation is an identity.
Chapter 7: Cash and Receivables 1. Indicate how to report cash and related items a. Cash-the most liquid of all assets; the standard medium of exchange and the basis for measuring and accounting for all other items. i. Money market funds that provide checking account privileges, however, are usually classified as cash. ii. Certain items present classification problems: companies treat postdated checks and I.O.U.s as receivables. Also, travel advances as receivables if collected from employees or deducted from their salaries (otherwise travel advance is like prepaid expense). b. Reporting cash i. Cash Equivalents 1. Stated together with cash; are short-term, highly liquid investments are readily convertible to cash and so near maturity that they present insignificant risk of changes in interest rates. 2. Ex: Treasury bills, commercial paper and money market funds 3. FASB has studied whether to eliminate cash-equivalent classification from financial statements presentations altogether. If an asset is not cash and is short-term in nature, it should be reported as a temporary investment. ii. Restricted cash