In accounting, cash is the money deposited in a bank and items that a bank will accept for immediate deposit. Cash is paper money, coin, bank balances or other media of exchange such as bank drafts, checks or postal money orders. Items not included in the definition of cash are postdated checks, IOUs and notes receivable. Postage stamps are a prepaid expense, not cash. I.O.U’s are receivables.
In most cases, cash is a current asset. The cash on hand and cash on deposit in the bank are shown in the balance sheet as one figure. Cash is the most liquid of the current assets and is listed first. However, if there is some reason the funds are restricted, the amount of restricted cash would then be excluded from the Current Assets section of the balance sheet. Note that restricted cash in a bank account is not considered a current asset. An example is cash held in a foreign country where remission restrictions exist. This would be true of funds in an insolvent bank or compensating balances required by lending banks.
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