Application Of Margin Deposit

At present, in the cash flow statement published by some listed companies, the amount of "other cash related to business activities" and "payment of other cash related to business activities" amount to two of the project amount is huge. It is true that the two have turned to cash flow objectively. But there is a process of eliminating the false and genuine, because one of the purposes of compiling the cash flow statement is to reveal the information of the company's cash flow creation. For this purpose, the conversion of margin deposits and demand deposits should be reported in terms of net, rather than aggregated by calculation.

At this stage, margin deposits usually include bank acceptance money deposit, bank guarantee deposit and bank letter of credit deposit. However, in the accounting practice, the editor does not ask the reason, and transfers all the deposits and demand deposits as a reflection of business activities. This is not in line with the actual situation. Since the cash flow statement differentiating business activities, investment activities and fund-raising activities, we can not generalize. For example, a letter of credit deposit for the imported equipment should be included in the investment activities. The deposit of letters of credit for the import of raw materials should be included in the business activities. The bank guarantee issued by the industrial and commercial enterprises is often related to the purchase and construction of long-term assets. The deposit of guarantee money should be included in the investment activities. The bank guarantee issued by the construction enterprise is often related to the business operation, and the deposit of guarantee money should be included in the business activities.

One view is that margin deposits should take account of the time limit. Margin deposits within 3 months or margin deposits that will expire within 3 months should be defined as "cash equivalents". This is one-sided view. The four essential factor of cash equivalents is a whole. "3 months" is only a reference quantitative index, and the purpose is "liquidity". Whether it's a bond investment or a bank acceptance bill, the former has securities. Trading market The latter has bank credit and has good liquidity. "Enterprise accounting standards explanation" also pointed out: "advance notice." Financial institution Time deposits that can be drawn should be included in the cash range. " The margin deposit is subject to agreement. Generally, it is impossible to "advance". Then... " Therefore, even if 1 months expire, it is not suitable to be defined as "cash equivalents". However, if the margin amount is not large and the impact is small, margin deposits can be regarded as reducing the workload of compiling the report. Cash equivalents This is a pragmatic approach.

It is worth noting that "accounting standards for enterprises" explains that cash includes cash, bank deposits and other monetary funds, and points out other monetary funds, including letter of credit margin deposits, and also points out that it is consistent with the contents of other monetary funds. This may be a clerical error. Because margin deposits are generally not payable at any time, and the deposit of letters of credit is no exception. In addition, the deposit money for bank acceptance and deposit of bank guarantee are also accounted for in other monetary funds, and the two deposit is not suitable for cash. Therefore, it is not appropriate to say that the contents of the accounts are consistent with those of other monetary funds.

In financing activities, enterprises often convert bank deposits into fixed deposits for their own loans. This is often the bank's "pull deposits and pull loans". This situation is usually regarded as "investment activities" and "fund-raising activities" in practice. This is not a realistic approach. A reasonable approach should be a holistic approach: there is neither "cash outflow from investment activities" nor "cash inflow from financing activities".