Financial Assets

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Financial Assets

  1. 1. Financial Assets<br />Cash<br />Accounts Receivable<br />1<br />6/4/2009<br />
  2. 2. Cash<br /> Cash, any items that banks will accept for deposit.<br />1- Coin and paper money<br />2- Check<br />3- Bank credit card sales<br />4- Money order<br />5- Traveler’s check<br />2<br />6/4/2009<br />
  3. 3. Reporting cash in the balance sheet<br />Cash Equivalents<br />3<br />6/4/2009<br />
  4. 4. Reporting cash in the balance sheet<br />Restricted Cash<br />4<br />6/4/2009<br />
  5. 5. Reporting cash in the balance sheet<br />Lines of Credit<br />5<br />6/4/2009<br />
  6. 6. The statement of cash flows<br />6<br />6/4/2009<br />
  7. 7. Case management<br />7<br />6/4/2009<br />
  8. 8. Using excess cash balances efficiently<br />1- Cash that is available for long-term investment may be used to finance growth and expansion.<br />2- If cash is not needed for business purposes, it may be distributed to the company’s stockholders.<br />8<br />6/4/2009<br />
  9. 9. Internal control over cash<br />9<br />6/4/2009<br />
  10. 10. Bank statements<br />The beginning bank balance, deposits, checks paid, other debits and credits in the month, and the ending bank balance.<br />Reconciling the bank statement<br />Explaining the differences between the balance shown in bank statement & depositor’s account records.<br />10<br />6/4/2009<br />
  11. 11. Accounts receivable<br />Uncollectible Accounts: If a company makes credit sales to customers, some accounts inevitably will turn out to be uncollectible.<br />11<br />6/4/2009<br />
  12. 12. The Allowance for Doubtful Accounts<br />The net realizable value is the amount of accounts receivable that the business expects to collect.<br />Writing off an Uncollectible Account<br />Receivable<br />When an account is determined to be uncollectible, it no longer qualifies as an asset and should be written off.<br />12<br />6/4/2009<br />
  13. 13. Monthly Estimates of Credit Losses<br />At the end of each month, management should estimate the probable amount of uncollectible accounts and adjust the Allowance for Doubtful Accounts to this new estimate.<br />There are 2 approaches to estimate credit loss-<br />1- The Balance Sheet Approach<br />2- The Income Statement Approach<br />13<br />6/4/2009<br />
  14. 14. Concentrations of credit risk<br />Concentrations of credit risk occur if a significant portion of a company’s receivables are due from a few major customers or from customers operating in the same industry or geographic region.<br />14<br />6/5/2009<br />
  15. 15. Thank You<br />15<br />6/5/2009<br />

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