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Cash consists of paper currency and coins. In the U.S. cash existed as coins until 1862, when the first federal paper money was issued in $5, $10 and $20 bills. This cash was freely convertible into gold until 1971 when the U.S. removed the link of its cash supply to gold deposits.
Most of the world’s currency exists on hard drives in electronic bank accounts. Cash represents less than one-tenth of the total value of global currencies.
Cash includes short-term investments that can be readily converted into cash. Checking accounts and money market accounts are considered cash. Negotiable money orders are also cash.
On a balance sheet, there is a line item for cash and its equivalents. Cash equivalents are any assets that can be converted quickly into cash. |
