Chapter 12 Cash and Marketable Securities（课件）-《实用会计英语》同步教学（大连理工大学出版社）

CASH AND MARKETABLE SECURITIES CHAPTER 12 12-1 2 2 What is Cash? Coins Currency Money orders received from customers Checks Money deposited in banks 12-1 Compensating balance In order to ensure a company’s credit-granting arrangement, a company is forced to keep a minimum amount in the bank account. The minimum is called compensating balance. 12-1 3 3 Application of Cash Account receivable Inventory Property Suppliers Employees Rents cash Convert Can’t pay 12-1 Cash and profit Cash Profit 12-1 Cash inflow & outflow customers lenders investors salaries suppliers creditors out in out out in in 12-1 Positive and negative cash flow A positive cash flow Inflow of cash > outflow of cash A negative cash flow Inflow of cash < outflow of cash 12-1 Components of cash flow Cash flow Operating cash flow Internal operations Investing cash flow Internal non-operating activities Financing cash flow To and from external sources 12-1 Marketable securities are government securities, bonds, or other securities which are invested by a company to avoid the excess cash lie idle . They are liquid assets in that they can easily and quickly be converted into cash. Marketable securities held as a temporary investment are classified as current assets. Marketable securities (Short-term investment) 12-1 Marketable securities (Short-term investment) 1. have definite market value and be exchanged on the security market publicly; As short-term investment, marketable securities should : 2. as surplus funds, have liquidity and profitability. 12-1 4 3 Classification of marketable securities Credit securities Equity securities Mixed securities 12-1 5 3 Credit securities indicate the credit that is owned by the investors, namely, the claim to the principal and interest on maturity date. Classification of marketable securities Equity securities show the equity that the owner owns, namely, the claim to the increment of capital. Mixed securities have a