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(a) Explain what is meant by the term 'cash equivalents'.

(a) Explain what is meant by the term 'cash equivalents'.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The statements of financial position for W Limited are as follows: 31 December Non-current assets Land and buildings Cost/valuation Accumulated depreciation Plant and equipment Cost Accumulated depreciation Current assets Inventory Trade receivables Cash and cash equivalents Total Assets Equity and Liabilities Ordinary share capital ($1 shares) Share premium Revaluation reserve Retained earnings Non-current liabilities 12% debenture (2030) Current liabilities Trade payables Bank overdraft 2021 $000 4 1150 201 949 539 326 213 1162 117 135 252 1414 600 120 80 136 936 150 86 242 328 478 1414 2020 $000 650 160 490 454 274 180 670 89 103 37 229 899 400 70 109 579 200 120 120 320 899 Total liabilities Total equity and liabilities The following information is also available. 1 The cost of land and buildings at 31 December 2020 comprised of land $250000 and buildings $400 000. The land, which is not depreciated, had been revalued to $330 000 on 1 July 2021. 2 On 1 March 2021, a final dividend for 2020 of $0.20 per share was paid. 3 An additional 200 000 ordinary shares were issued on 1 April 2021. On 1 September 2021 an interim dividend of $0.10 per share was paid on all shares in issue on that date. 5 During the year ended 31 December 2021, an item of plant and machinery, costing $12000, was sold for $3000 at a profit of $2000. 6 In the year to 31 December 2021, all interest due, $44 000, has been paid.
Transcribed Image Text:The statements of financial position for W Limited are as follows: 31 December Non-current assets Land and buildings Cost/valuation Accumulated depreciation Plant and equipment Cost Accumulated depreciation Current assets Inventory Trade receivables Cash and cash equivalents Total Assets Equity and Liabilities Ordinary share capital ($1 shares) Share premium Revaluation reserve Retained earnings Non-current liabilities 12% debenture (2030) Current liabilities Trade payables Bank overdraft 2021 $000 4 1150 201 949 539 326 213 1162 117 135 252 1414 600 120 80 136 936 150 86 242 328 478 1414 2020 $000 650 160 490 454 274 180 670 89 103 37 229 899 400 70 109 579 200 120 120 320 899 Total liabilities Total equity and liabilities The following information is also available. 1 The cost of land and buildings at 31 December 2020 comprised of land $250000 and buildings $400 000. The land, which is not depreciated, had been revalued to $330 000 on 1 July 2021. 2 On 1 March 2021, a final dividend for 2020 of $0.20 per share was paid. 3 An additional 200 000 ordinary shares were issued on 1 April 2021. On 1 September 2021 an interim dividend of $0.10 per share was paid on all shares in issue on that date. 5 During the year ended 31 December 2021, an item of plant and machinery, costing $12000, was sold for $3000 at a profit of $2000. 6 In the year to 31 December 2021, all interest due, $44 000, has been paid.
(a) Explain what is meant by the term 'cash equivalents'.
Transcribed Image Text:(a) Explain what is meant by the term 'cash equivalents'.
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