Commerce Exam > Commerce Videos > Accountancy Class 12 > Cash and cash Equivalents
Cash and cash Equivalents Video Lecture | Accountancy Class 12 - Commerce
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FAQs on Cash and cash Equivalents Video Lecture - Accountancy Class 12 - Commerce
| 1. What are cash and cash equivalents in commerce? |  |
Ans. Cash and cash equivalents in commerce refer to liquid assets that can be easily converted into cash within a short period. This includes actual cash on hand, as well as highly liquid investments such as Treasury bills, commercial paper, and money market funds.
| 2. Why are cash and cash equivalents important in commerce? | |
Ans. Cash and cash equivalents play a crucial role in commerce as they provide businesses with the necessary liquidity to meet their short-term obligations. They ensure that a company has enough resources to pay for day-to-day expenses, manage unexpected cash flow fluctuations, and seize immediate investment opportunities.
| 3. How are cash and cash equivalents reported in financial statements? | |
Ans. Cash is typically reported under the "Current Assets" section of a company's balance sheet, while cash equivalents are also included in this category. The specific breakdown of cash and cash equivalents is usually disclosed in the notes to the financial statements, providing details of the different types of cash equivalents held by the company.
| 4. What is the difference between cash and cash equivalents? | |
Ans. Cash refers to physical currency, such as coins and banknotes, along with deposits in bank accounts that can be withdrawn on-demand. On the other hand, cash equivalents are short-term investments that can be readily converted into cash with minimal risk of value fluctuations, typically with a maturity period of three months or less.
| 5. How can businesses effectively manage their cash and cash equivalents? | |
Ans. Effective cash and cash equivalents management involves maintaining an optimal cash balance to meet operational needs while minimizing excess idle cash. Businesses can achieve this through proper cash flow forecasting, efficient accounts receivable and payable management, implementing cash conservation techniques, and exploring investment options for surplus cash to generate additional income.
About this Video
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Dec 23, 2024 Last updated |
Video Description: Cash and cash Equivalents for Commerce 2024 is part of Accountancy Class 12 preparation.
The notes and questions for Cash and cash Equivalents have been prepared according to the Commerce exam syllabus.
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Video Lecture & Questions for Cash and cash Equivalents Video Lecture | Accountancy Class 12 - Commerce - Commerce full syllabus preparation | Free video for Commerce exam to prepare for Accountancy Class 12.
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