The cash account is the first asset listed in the current asset section of the balance sheet. It consists of coin, currency, and checking accounts, as well as money orders, certified checks, cashier's checks, personal checks, and bank drafts received by a company. Remember also that cash is the standard medium of exchange and thus provides the basis for measuring all financial statement accounts.

Companies use a number of different titles to describe the cash account on their balance sheets. Accounting Trends and Techniques (2009) provided the summary contained in Figure 6-4 of the balance sheet captions of 600 of the largest companies in the United States. Note that the title Cash is decreasing in popularity, while Cash and Equivalents is becoming much more common.

FIGURE 6-4 Cash: Balance sheet captions


The relative size of the cash account on the balance sheet varies across companies in different industries. Figure 6-5 reports that Yahoo!, Wendy's/Arby's, and Cisco carry relatively large amounts of cash. Yahoo! may be holding cash intended for acquisitions, while Cisco built up a cash reserve as protection during the recession Wendy's/Arby's has to keep its cash registers full.

FIGURE 6-5 Cash as a percentage of total assets and current assets


Three issues concerning cash ...

Get Financial Accounting: In an Economic Context now with O’Reilly online learning.

O’Reilly members experience live online training, plus books, videos, and digital content from 200+ publishers.