In accounting, the term “cash” refers to liquid assets that are readily available for spending or use. It’s an essential component of a company’s balance sheet under the current assets category. Understanding which items are included in cash can help businesses and individuals maintain accurate financial records. Let’s explore the common items that are considered cash in accounting.

Common Items Included in Cash

1. Coins and Currency

• Yes: Coins and currency (paper money) are the most obvious forms of cash. These are physical cash resources that a business or individual can use for transactions.

2. Bank Checking Account Balances

• Yes: Bank checking account balances are considered cash. This includes funds in business or personal checking accounts that are readily available for withdrawal and use.

3. Short-Term Investments

• Yes: Short-term investments (like money market funds) that can be quickly converted to cash without significant loss in value are also considered cash equivalents. These investments are highly liquid and typically have a maturity of three months or less.

4. Accounts Receivable

• No: Accounts receivable refers to money owed to a business by customers. While it represents expected cash inflows, it is not considered cash because it has not yet been received.

5. Credit Card Balances

• No: Credit card balances are not included in cash. Credit cards represent a line of credit, not liquid funds, and should be classified as liabilities, not assets.

Conclusion

Items included in cash typically consist of coins, currency, bank checking account balances, and short-term investments. Accounts receivable and credit card balances, while important financial components, are not considered cash in accounting.