Principles of Accounting: Chapter Six

Home

Chapter 6 begins with definitions of cash and cash equivalents. This is not always as obvious as it would seem, and presentation of items and amounts in the Cash account on a company's balance sheet should follow fairly precise guidelines. The initial portion of the chapter also emphasizes the importance of proper cash management and provides insight into tools and opportunities for improved cash management.

A detailed discussion and illustration of the bank reconciliation is presented, along with appropriate accounting adjustments. Another illustration is used to demonstrate the correct methods for managing and accounting for a petty cash fund.

The chapter closes with an examination trading securities. Trading securities are usually short-term type investments that are made with object of generating profits. Oftentimes they are acquired with excess cash funds. Trading securities are measured on a balance sheet at fair value, and fluctuations in value are reported in income as they occur.

Exercises

To aid in your understanding of this chapter, exercises with solutions are available for free download at Bookboon.com. You will find these exercises very helpful in providing models and guidelines for solving all of the problems at principlesofaccounting.com.

Click here to go to Bookboon.

Problems
Goals Achievement
Fill in the Blanks
Multiple Choice
Objectives
Key Terms

Problems: Chapter Six

Obtain the entire Current Assets Problem Workbook via the linked image at left. Our high volume production process makes this an economical option as compared to printing these files on your own printer!



Basic		Problem	Worksheet	Combined	Objective

	B-6.01				Composition of cash

	B-6.02				Cash management

	B-6.03				Preparation of a basic bank reconciliation

	B-6.04				Journal entries from bank reconciliation

	B-6.05				Petty cash

	B-6.06				Trading securities



Involved		Problem	Worksheet	Combined	Objective

	I-6.01				Cash composition and management

	I-6.02				Bank reconciliation

	I-6.03				Comprehensive bank reconciliation with business papers

	I-6.04				Team-based study of petty cash with business papers

	I-6.05				Trading securities

	I-6.06				Applied accounting for trading securities

The preceding table includes links to "Basic" and "Involved" problems. Each link will download the file containing a spreadsheet for the problem and a template worksheet on which you can prepare the solution electronically. If you see a light bulb icon on a worksheet, just mouse over above the icon and a comment box will appear. The comments include useful suggestions for improving your spreadsheet skills.

Solutions to these problems may be obtained from your instructor, however you may not post or redistribute, electronically or otherwise, any such solution material. Solution material may be provided to you for your sole use only, at the discretion of your individual instructor. Violation of this policy constitutes a copyright violation. Alternative problems, with solutions, may be found under the "Exercises" tab within each chapter. Video solutions to selected problems are available to students enrolling in the online course.