17ASC 305 Cash and Cash Equivalents
Perspective and Issues
Subtopic
ASC 305, Cash and Cash Equivalents, contains one subtopic:
- ASC 305-10, Overall, that provides implementation guidance on cash on deposit at a financial institution.
Scope
ASC 305 applies to all entities and has no scope exceptions.
Overview
To provide information about liquidity, assets on the statement of financial position are often divided into current and noncurrent assets. Current assets consist of cash and other assets that are reasonably expected to be realized in cash or sold or consumed during the normal operating cycle of the business. Cash is the most liquid of assets, and cash items are generally classified as current assets.
Definitions of Terms
See Appendix A, Definitions of Terms, for definitions of Cash and Cash Equivalents.
Concepts, Rules, and Examples
Cash
To be included as cash in the statement of financial position, funds must be represented by coins, currency, undeposited checks, money orders, drafts, and demand deposits that are immediately available without restriction. Recognition and measurement of cash is generally straightforward. However, it is necessary to inform readers of the financial statements about any limitations on the ability to use cash in current operations.
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