CMA Intermediate · Corporate Accounting and Auditing · Cash Flow Statement
Under Ind AS 7, which statement about the definition of 'cash' is correct?
Under Ind AS 7, cash comprises cash on hand and demand deposits. It is not limited to physical currency, and it does not include all bank deposits or marketable securities, because only demand deposits are covered by the definition of cash.
- ACash comprises cash on hand and demand depositsCorrect
- BCash comprises cash on hand and all bank deposits irrespective of maturity
- CCash comprises only physical currency held by the entity
- DCash comprises cash on hand and marketable securities
Explanation
Ind AS 7 defines cash as cash on hand and demand deposits. Time deposits with longer maturity and marketable securities are not cash by that definition, and physical currency alone is too narrow because demand deposits are included.
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