Q1: What is ‘cash’ in the Statement of Cash Flows?

A:

Cash is more than bank notes and coins held by our firms; and also more than money in bank accounts which your firm holds, which it can withdraw whenever it likes (demand bank accounts). Cash in accounting also includes ‘cash equivalents’, which are ‘short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.” (AASB 107 Statement of Cash Flows, para 6). These ‘cash equivalents’ are usually marketable instruments a firm holds in the money markets. The money markets are usually only accessible by larger businesses and high net worth individuals, although mechanisms are developing to make investing spare cash in the money markets more accessible to individuals, particularly through financial planners and other advisers and intermediaries.

Also, see Martin’s videos: What is cash?