What is the importance of cash segmentation? what are its advantages and disadvantages?

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Mohammed El Tahir Mohammed Yousif
05-September-2017

We can simply reclassify an earmarked cash to other use if we want to. Why put restriction?

Question ajoutée par Jeziel Embodo , Municipal Accountant , Local Government Unit of Padada
Date de publication: 2013/06/18

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par Kokab Rahman , Managing Director, Head of Business Development , Radeya Business Services http://www.radeya.biz

If I understood the question right: Cash segmentation is important because it shows on the balance sheet the amount of cash available for operational needs and how much is restricted or allotted for other uses, such as repaying current portion of long-term debt.
Without segmentation, users of financial reports would be deceived regarding the true position of the company.

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par Utilisateur supprimé

P&L - Cash segmentation gives transparency and weight-age to the Financial statements.
Sometimes a company shows substantial book profits but may have no cash in the bank to vouch for it.
The cash segmentation shows the Company's realized profits.
BS - It shows the ability of the firm to finance its operations and expansions.

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