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Cash and cash equivalents

FAR Chapter 10 · Area II · Blueprint II.A

Area II, select balance sheet accounts, is 30 to 40% of FAR, and it opens with the simplest account. The Blueprint asks you to calculate cash and cash equivalent balances, reconcile the bank balance to the general ledger, and investigate items that will not reconcile. The bank reconciliation is a classic simulation. The rule that carries it is short: fix the bank side for what the bank does not know yet, fix the book side for what the company does not know yet.

In this chapter

1. What counts as cash
2. Restricted cash, compensating balances and overdrafts
3. The bank reconciliation: the bank side
4. The bank reconciliation: the book side and the entries
5. Investigating items that will not reconcile
6. Petty cash
7. Year-end cutoff for cash

This chapter has 7 lessons, 50 practice MCQs with explanations and 20 simulations, plus flashcards and a recall sheet.

What this chapter covers

• What counts as cash
• bank reconciliation
• investigating unreconciled items

Chapter 9: Ratios and performance metrics · Chapter 11: Trade receivables