Term Deposit

[eeps]

I think Phenotype and JinXi raise valid points. It is probably Investing to be honest, as Phenotype pointed out "it does not in any way change the financial situation of the firm, as this amount is not being "borrowed" and "needing to be paid back". It's not a loan" - that's what I was thinking till I realised it wasn't a loan.

Also, I don't think I could disagree with Vicki Baron - deputy chief-assessor to Mr. Neville Box. They would know more than anyone else I suppose. =P

[sam.utute]

Me:  Just one final question Ms,
   When you receive back a term deposit
      What would it be classified as
      investing? but it really doesnt sound logical
      or is it Financial?
     

   Teacher:- Hmmm....an interesting question. It is a cash flow back into the business but is not an NCA , therefore not investing. Also it is not Financing. So as a matter of deduction, it can only fall under operating inlow along with interest received. (2 hours ago | Edit | Delete)

This teacher failed lol.

[aposta28]

Hey guys
Neville Box logged on MSN and just asked him


VCE Accounting says:
 go 4 it
<<[†] aposstt [†]>> fkn olympiakos, lose the biggest game of the year, REZILI says:
 When u receirve back a Term deposit, in the Cash flow statement, what is it classifed under, and why?

VCE Accounting says:
 if its longer than 12 mths
 its investing
 if its short term its part of cash held (cash balance)


<<[†] aposstt [†]>> fkn olympiakos, lose the biggest game of the year, REZILI says:
 SO you dont put it in operating or financing if its within 12 months?


VCE Accounting says:
 short term investments are part of cash held
 its defined as cash and cash equivalents

<<[†] aposstt [†]>> fkn olympiakos, lose the biggest game of the year, REZILI says:
 ohhhyeahh

VCE Accounting says:
 make sense?

VCE Accounting says:
 at the bottom of report
 here is an example
 cash on hand 1000
 cash at bank 3000
 2 mth term deposit 6000
 cash held at start of period would be 10000

[Chavi]

hahaha - how did you get Neville Box on MSN>>??

[Chavi]

Hey guys
Neville Box logged on MSN and just asked him


VCE Accounting says:
 go 4 it
<<[†] aposstt [†]>> fkn olympiakos, lose the biggest game of the year, REZILI says:
 When u receirve back a Term deposit, in the Cash flow statement, what is it classifed under, and why?

VCE Accounting says:
 if its longer than 12 mths
 its investing
 if its short term its part of cash held (cash balance)


<<[†] aposstt [†]>> fkn olympiakos, lose the biggest game of the year, REZILI says:
 SO you dont put it in operating or financing if its within 12 months?


VCE Accounting says:
 short term investments are part of cash held
 its defined as cash and cash equivalents

<<[†] aposstt [†]>> fkn olympiakos, lose the biggest game of the year, REZILI says:
 ohhhyeahh

VCE Accounting says:
 make sense?

VCE Accounting says:
 at the bottom of report
 here is an example
 cash on hand 1000
 cash at bank 3000
 2 mth term deposit 6000
 cash held at start of period would be 10000

BTW, This doesn't answer the question of what short-term term-deposits are classified as.
All we know is the 12+ month deposits are Investing inflows. What about 6 or 9 month term deposits?

[davyp3]

HAHAHA HE TOLD ME EXACT SAME THING!

[JinXi]

Is he implying that term deposits that are of less than 12 months are not recorded in the CFS?

[davyp3]

he says its part of cash held

[sam.utute]

he says its part of cash held

Which means...

[eeps]

"Cash on Hand $1,000 + Cash at Bank $3,000 + 2-month Term Deposit $6,000 = cash held at start of period would be $10,000."

I'd think you add the Term Deposit to your "cash held at the start of period". I'm sort of lost, but I'd doubt the exam would ask a question such as what is a Short-term Deposit would be classified as in the Cash Flow Statement - I certainly haven't learnt this before.

[lilaznkev1n]

yeah i agree with you, it think it means that it would be included in the cash flow as the termdeposit if it is less than 12 months, it is part of cash at bank (Bank Balance).
Interesting fact that my teacher told me today: Term deposits can be retrieved fully at any time with a small fee, so if it asks you:

2.3) On October 1 2011 Alisha deposited $12,000 in a 12 month Term Deposit Account. The interest rate is 8% per annum paid in two installments on 31 March 2012 and 30 September 2012.
2.3.2- State the effect the deposit will have on the liquidity of the business at 31 December 2011.
It will still have a positive effect even though the business' cash at bank has decreased due to taking out the term deposit, the term deposit amount in full can be retrieved at any time with a small fee so the liquidity of the business will still improve.

At first I said deteriorated as I thought it will reduce cash at bank, I didn't know that you can retrieve it... I doubt they would also ask this question as well...

[mmmmm]

My teacher said that it's operating if it's less than 12 months.

[eeps]

LOL so confusing!.. =P

Does anyone have a definite answer to this question?! =S *sighs*

[nbalakers24]

if it is in the balance sheet beforehand: (when its shortterm)
counted in cash at start

if a short term deposit is recieved or paid out, whatever . ie less than 12 months
it is recorded under operating

if its received and intending to be held for over 12 months
investing

[JinXi]

Weird lol My teacher told me that short term deposit are not operating considering that they are not Day to Day activities, which is the definition of Operating activities, but then again....