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Reporting Cash in the Balance Sheet

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Reporting cash in the balance sheet
(a.)The first asset shown in the balance sheet of many companies is labeled "cash and cash equivalents." Explain the term "cash equivalent" and give two examples.Why are cash and cash equivalents listed first in the balance sheet?
(b.)The December bank statement for Kowal Publishing Co.reports a balance of $13,847.59 at December 31,2015.Kowal's accounting records,however,show a balance of $15,245.47 in the same bank account prior to preparation of the bank reconciliation.
Which amount should be included in the amount of cash reported in Kowal's balance sheet at December 31,2015? Explain your answer.


Definitions:

Income Elasticity

A measure of how much the demand for a product changes in relation to a change in consumers' incomes.

Luxuries

Items or services that are considered non-essential but desirable, typically associated with high quality and a higher price.

Inelastic Demand

A situation where the quantity demanded of a good or service changes minimally in response to price changes.

Total Revenue

The total amount of money received by a company for goods sold or services provided during a certain period of time.

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