BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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expected to be realised in the entity’s normal operating cycle
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held primarily for the purpose of trading
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expected to be realised within 12 months after the reporting period
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cash and cash equivalents (restricted).
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Detailed explanation-1: -Assets whose value is recorded in the Current Assets account are considered current assets. Current assets include cash, cash equivalents, accounts receivable, stock inventory, marketable securities, pre-paid liabilities, and other liquid assets. Current Assets may also be called Current Accounts.
Detailed explanation-2: -Restricted Cash on the Balance Sheet Cash that is restricted for one year or less is categorized under current assets, while cash restricted for more than a year is categorized as a non-current asset.
Detailed explanation-3: -Understanding Cash and Cash Equivalents (CCE) If a company has cash or cash equivalents, the aggregate of these assets is always shown on the top line of the balance sheet. This is because cash and cash equivalents are current assets, meaning they’re the most liquid of short-term assets.
Detailed explanation-4: -Restricted cash refers to money that is held for a specific purpose and thus not available to the company for immediate or general business use. Restricted cash appears as a separate item from the cash and cash equivalents listing on a company’s balance sheet.
Detailed explanation-5: -One example of restricted cash would be a bank loan requirement, whereby a borrower must maintain a specific percentage of the total loan amount in cash at all times.