What is Cash and Cash Equivalents?

Cash and Cash Equivalents
As per the revised Schedule, a separate line item of 'cash and cash equivalents' is required to be presented under 'current assets' on the face of balance sheet. In the notes, it should be sub-classified as :
  • Balances with banks
  • Cheques, drafts on hand
  • Cash on hand
  • Others (specifying nature)
Balances with Banks
The following balances are required to be disclosed separately :
  • Earmarked balances with banks (such as for unpaid dividend)
  • Balances with banks held as margin money or security against the borrowings, guarantees or other commitments
  • Balance under repatriation restrictions
  • Bank deposits with maturities of more than 12 months
The term 'cash and cash equivalents' has been defined in AS 3 as per which comprises cash on hand and demand deposits with banks and cash equivalents are short term, highly liquid investments that are readily convertible into known amounts of cash and that are subject to an insignificant risk of changes in value.