Cash Receivables Marketable Securities Cash and Cash Equivalents Cash creates mangement control problems because of the ease with which it can be converted to uses outside the firm. It also generates problems in terms of how much cash should the firm have on hand. On the balance sheet firms indicate their cash and cash equivalents.
Cash equivalents are items that can be converted to cash in a very short time.
For example commercial paper with a maturity of less than 30 days is considered a cash equivalent. When bank balances are restricted firms should report cash with the amount restricted identified. Restricted cash amounts may come about because of lenders requiring that compensating balances be maintained by firms with outstanding loan balances. Receivables Receivables can be separated into two categories, trade receivables, and nontrade receivables. Trade receivables are further categorized as Accounts Receivable, and notes receivable.