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40.30.23 Cash Equivalent Investments

40.30.23 Cash Equivalent Investments

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Cash equivalent investments must be purchased without premiums, discounts or accrued interest. See CLAM 40.30.10 for additional details.

Account Number Name Description
1000040 Non-LGIP Invest 0-90 Days A cash equivalent investment is a highly liquid investment having a maturity of three months or less. It should be at minimal risk of a change in value. Examples of cash equivalents are bankers’ acceptances, certificates of deposit, commercial paper, marketable securities, money market funds, short-term government bonds, and treasury bills. To be classified as a cash equivalent, an item must be unrestricted, so that it is available for immediate use.
1000050 Investment with LGIP When funds are deposited with the State Treasurer in the Local Government Investment Pool this account must be used since the balances in this account for colleges must agree with the balances shown by the Treasurer in the LGIP records.
1020010 Non-LGIP Invest 90-365 Days Short-term investments (no premium, discount or accrued interest), also known as marketable securities or temporary investments, are financial investments that can easily be sold or converted to cash within 3-12 months. Some common examples of short-term investments include CDs, money market accounts, high-yield savings accounts, government bonds, and Treasury bills. Also includes short-term portion of long-term investments.
4120010 Investment Income Earnings on deposits and investments. Investment earnings may also be coded by specific type for example dividend income (account 4120030), and capital gains and losses (account 4120050).

Illustrative Entries

Non-LGIP Invest 0-90 Days

Fund Class Dept Method Acct DR Acct CR Amount ($)
790 285 ddddd AP Voucher 1000040 1000070 100,000.00

Investment with LGIP

Fund Class Dept Method Acct DR Acct CR Amount ($)
790 285 ddddd AP Voucher 1000050 1000070 50,000.00

Non-LGIP Invest 90-365 Days

Fund Class Dept Method Acct DR Acct CR Amount ($)
790 285 ddddd AP Voucher 1020010 1000070 75,000.00

Interest income on all short-term investments (anticipated investment less than 365 days) should be recorded using account 4120010. The interest/cash should be distributed to each fund based upon its share of the investment.

Illustrative Entry

Investments less than 365 Days

Fund Class Dept Method Acct DR Acct CR Amount ($)
790 285 ddddd AR Direct Journal 1000070 4120010 5,000.00

If the interest is reinvested, then the following entry should be recorded. In addition, each fund’s investment should be increased proportionately as well.

Illustrative Entry

Investments less than 365 Days

Fund Class Dept Method Acct DR Acct CR Amount ($)
790 285 ddddd Journal Entry 1000040,
1000050,
1020010
4120010 5,000.00

Page Manager: slocke@sbctc.edu
Last Modified: 6/5/23, 12:48 PM

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