They can include coin, currency, bank deposits, and negotiable instruments such as money orders, checks, and bank drafts. If certain amounts of cash have been designated for a specific use, other than for payment of currently maturing obligations, it is segregated from the general cash account. Cash equivalents are short-term and so near their maturity that they present insignificant risk of changes in interest rates. Control over the handling of cash is very important. Handling of cash presents special management and control problems because it is part of many transactions and is highly liquid.
Cash is the single asset readily convertible into any other type of asset.
An enterprise should have neither too much nor too little cash available at any time. Control procedures used for cash transactions can include the use of bank accounts such as a general checking account, imprest bank accounts and lockbox accounts. In a petty cash system , a petty cash custodian is given a small amount of currency. The custodian obtains a signed receipt for the payment when a disbursement is made. When cash in the fund runs low, signed receipts are submitted to the general cashier who prepares a check to replenish the petty cash fund.