How to calculate the monetary funds of the balance sheet

Mondo Finance Updated on 2024-01-19

Monetary funds are an important account in a company's balance sheet, which includes cash, bank deposits, and other monetary funds held by the business. The amount of monetary funds is usually presented on the asset side of the balance sheet and reflects the total amount of cash and bank deposits that the business can use to pay at any time. The details of how to calculate monetary funds in the balance sheet are described below.

First of all, we need to understand the composition of monetary funds. Monetary funds mainly include the following three parts:

1.Cash: Coins and banknotes held by businesses, including cash and reserves for day-to-day operations.

2.Bank deposits: deposits deposited by enterprises in banks or other financial institutions, including demand deposits, time deposits, call deposits, etc.

3.Other monetary funds: monetary funds other than cash and bank deposits held by enterprises, such as bank drafts, cashier's checks, credit cards, etc.

The calculation of monetary funds needs to be carried out by following these steps:

1.Collect financial statement data: Obtain data on cash, bank deposits, and other monetary funds from the company's balance sheet.

2.Calculate the sum of cash and bank deposits: The amount of cash and bank deposits is added up to obtain the initial balance of monetary funds.

3.Add funds in other currencies: Add the amount of funds in other currencies to the initial balance to get the final amount of money in currency.

4.Reconcile data: Check whether the calculation results are consistent with the amount of monetary funds shown in the financial statements to ensure the accuracy of the calculation.

There are a few things to keep in mind when calculating monetary funds:

1.It is important to ensure that the data collected in the financial statements is authentic and reliable to avoid errors in the calculation results.

2.During the calculation process, each item of data should be carefully checked to ensure the accuracy of the calculation.

3.When calculating other monetary funds, it is necessary to distinguish which ones belong to monetary funds and which do not, so as to avoid other assets being mistakenly included in monetary funds.

Through the above steps, we can calculate the amount of monetary funds in the balance sheet. It is very important for investors and companies to understand the composition and amount of monetary funds, as it reflects the company's ability to pay and liquidity, and can help investors and companies make more informed decisions.

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