How to Categorize Your Money Market Funds on a Balance Sheet
A money market fund is a type of investment that pools investors’ money to buy safe, short-term assets that generate interest. The fund is highly liquid, which means an investor can typically withdraw cash from it at any time. You categorize your investment in a money market fund as part of cash and cash equivalents in the current assets section on your balance sheet. Cash and cash equivalents include the most liquid items a company holds, which means the items are either cash or can be converted to cash quickly.
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Instructions
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1
Determine from your accounting records the amount of your money market fund account balance at the end of an accounting period. For example, assume your money market fund account balance is $10,000.
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2
Identify in your records the total amount of your other cash and cash equivalent items, which include currency, coins, bank account balances and liquid short-term investments such as Treasury bills. In this example, assume you have $15,000 in other cash and cash equivalent items.
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3
Add the money market fund account balance and the other cash and cash equivalent items to determine total cash and cash equivalents. In this example, add $10,000 and $15,000 to get $25,000 in total cash and cash equivalents.
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Write “Cash and Cash Equivalents” on the first line of the current assets section of your balance sheet.
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Write the total amount of cash and cash equivalents next to the description. In this example, you would write “Cash and Cash Equivalents $25,000.”
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