Question：The statement of cash flows is based on 'cash and cash equivalents' as defined by IAS 7 'Statement of Cash Flows'.
Which of the following items could be included in cash?
A. Bank current account in domestic currency.
B. Petty cash float.
C. Bank overdraft.
D. Short term deposit (less than three months).
E. Bank current account in foreign currency.
The correct answer is:All the items except the short term deposit are included in cash.
解析：IAS 7 defines cash as 'cash in hand and demand deposits'.
A deposit is repayable on demand if it can be withdrawn without notice (in practice within 24 hours).
A short term deposit normally has a fixed maturity date and cannot be withdrawn earlier without incurring a penalty.
Therefore it falls outside the definition of cash but comes under the definition of cash equivalents.
An overdraft is a bank borrowing, and as such, would normally be treated as a financing activity. However, in some countries, bank overdrafts which are repayable on demand form part of the cash management of an entity, so in such circumstances, are treated as a part of cash and cash equivalents.