Page 1 |
Previous | 1 of 5 | Next |
|
This page
All
Subset
|
34 HASKINS & SELLS May THE asset of cash occupies an obviously important place in every business enterprise. It is the medium through which practically all transactions eventually are consummated. Barter is extremely rare in modern society. At the inception of an enterprise cash is required for the purchase of plant and equipment, furniture and fixtures, and other things necessary to the functions of the business. Occasionally such property is paid for by the .issuance of capital stock to the vendors. Usually, however, the greater part of it is paid for, within a short time if not immediately, in cash invested by the proprietors or obtained from the issuance of securities to the public. Cash is indispensable in the current operations of an enterprise. It is required for the purchase of materials and supplies, payment of salaries and wages, and settlement of expenses. Although materials usually are purchased on credit, cash is required for final discharge of the liability. These materials are used in production, and together with wages and expenses pass into inventories. As goods are sold, the values represented by the inventories pass, plus a profit, into accounts receivable, and sooner or later are liquidated into cash, thus completing the cycle. Cash, therefore, occupies a pivotal position. Cash may be considered generally from three angles. From the point of view of accounting there arises the question of the definition of the term and the position of cash in the balance sheet. From the standpoint of irregularities there is the necessity of safeguarding the funds against improper use and embezzlement. From the viewpoint of sound business there must be considered the question of conservation of cash resources and control of financial operations. In deciding what constitutes cash, it may be necessary to classify any or all of the following items: foreign currency; certificates of deposit; deposits to secure service or the return of property such as containers; deposits made by employes for keys or badges; deposits with trustees for sinking funds; advances to agents or others for working funds; vouchers representing disbursements from petty cash funds, not yet reimbursed; payroll advances; checks cashed for employes; etc. In many instances this question is of more than academic importance. A banker, for example, is vitally interested in knowing whether the item of cash in a balance sheet submitted by a prospective borrower includes a large amount of payroll advances and vouchers not yet reimbursed, or whether the entire amount is immediately available for discharging current liabilities. The pivotal position of cash, resulting in a continuous flow of checks and currency through an enterprise, and the ease with which cash may be exchanged for goods in satisfaction of one's wants, thus losing its identity, make it imperative that safeguards be placed around those who handle cash, in order to prevent misappropriation. Systems of office routine, control, and internal check, should be so arranged as to render it practically impossible for a dishonest employe to commit embezzlement without immediate detection. Opportunity for fraud depends largely upon the extent to which the cashier has access to incoming receipts, particularly currency, and the ease with which he may withdraw funds from the bank. Opportunity for concealment of irregularities depends upon the extent to which the cashier exercises control over, or has access to, the collateral records. Probably most discussions of cash are written from the standpoint of irregu- The Various Aspects of Cash
Object Description
Title |
Various aspects of cash |
Author |
Anonymous |
Subject |
Cash flow -- Accounting Budget in business Financial statements |
Citation |
Haskins & Sells Bulletin, Vol. 09, no. 05 (1926 May), p. 34-38 |
Date-Issued | 1926 |
Source | Originally published by: Haskins & Sells |
Type | Text |
Collection | Deloitte Digital Collection |
Digital Publisher | University of Mississippi Libraries. Accounting Collection |
Date-Digitally Created | 2009 |
Identifier | HS Bulletin 9-p34 |