Wave, Inc. follows IFRS for its external financial reporting. The statement of cash flows reports changes in cash and cash equivalents, which of the following is not considered cash or a cash equivalent under IFRS?
A) Coin.
B) Bank overdrafts.
C) Commercial paper.
D) Accounts receivable.

Question

Quizplus · Accepted Answer

Under IFRS, cash and cash equivalents include items that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. This typically includes coin (cash), bank overdrafts (if they are repayable on demand and form an integral part of an entity's cash management), and commercial paper (if it is short term and highly liquid). Accounts receivable, however, are not considered cash or cash equivalents because they represent amounts that are owed to the company by its customers and may not be readily convertible to known amounts of cash or subject to an insignificant risk of changes in value.

Wave, Inc Follows IFRS for Its External Financial Reporting