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 Topic: Question concerning netting cash accounts ( Topic Closed)
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shades395
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Joined: 13 Jul 2010
Location: United States
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Posts: 73
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| Posted: 22 Jul 2010 at 20:36 | IP Logged
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There is an apparent inconsistency (in my opinion) between Becker MCQs #10 and #37 in the first F4 section, "Working Capital and its Components." The questions are lengthy and I don't want to type them both out, but basically, both questions involve multiple cash accounts, one with a positive balance and one with a negative. In question #10, these accounts are netted, and Becker notes in their answer a "legal right" of a company to do this. However, in question #37, the amounts are not netted, with the answer stating that the negative cash balance must be reported as a current liability.
The only difference between the two questions is that in #37, the company has a positive bank statement balance but a negative book balance, while in question #10 they just tell you the cash balances.
So, essentially, can you net positive and negative cash accounts? Or, if your book balance is negative, is this a current liability? Any help is greatly appreciated, thanks! (and sorry for the long post)
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REG 7/01/2010 - 99
FAR 7/27/2010 - 97
BEC 8/11/2010 - 91
AUD 8/30/2010 - 92
Becker 2010
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shades395
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Joined: 13 Jul 2010
Location: United States
Online Status: Offline
Posts: 73
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| Posted: 22 Jul 2010 at 20:39 | IP Logged
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Okay never mind just figured it out...it's because in the first question, the two accounts are with the same bank, so you can net them. In the second one, they are not, and thus cannot be netted. Well, hope this helps anyone who might be confused, and lesson learned...use the search function before posting!
__________________
REG 7/01/2010 - 99
FAR 7/27/2010 - 97
BEC 8/11/2010 - 91
AUD 8/30/2010 - 92
Becker 2010
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