8.1 Cash Book and Petty Cash Book 8.1.1 Cash Book Cash book is used to record all the business transactions that involving cash receive and cash payment. By recording the transactions in the cash book, it is easy to calculate the amount of money received and paid for a particular date. There are three types of cash book, namely single column cash book, double column cash book and petty cash book (Accounting Notes, n.d.). (a) Single Column Cash Book This kind of cash book has only one “Amount” column at the debit and credit side of cash book for recording cash receipts and cash payments as shown in Table 1 below. There are two methods to record transactions in the cash book which is “Traditional Approach” and “Equation Based Approach”. When using the traditional approach, the rule that must be followed is debit what comes in and credit what goes out. This simply means …show more content…
1 Balance b/d 350 17,000 50,400 8.2 Investigation of discrepancies between bank statement and cash book There are three main reasons that cause the discrepancy between cash book balance and bank statement balance. Those main reasons are: the transactions have been recorded in the cash book but not yet recorded in the bank statement, the transactions have been recorded in the bank statement but not yet recorded in the cash book, and bookkeeping errors may be made either by the bank, the business, or both (Mohd Nizal Haniff, Anuar Nawawi, Rodziah Abd Samad & Intan Salwani Mohamed, 2014). 8.2.1 Transactions recorded in cash book but not in bank statement There are two kind of transactions that have been recorded in the cash book (bank column) but may not have been recorded in the bank statement. (a) Transactions which involving money going out that have been credited in the cash book (bank column) but have not yet been debited in the bank statement. Example: Unpresented
Skimming. Because the wire transfers and cashier's checks were outside the accounts payable system (book keeping system), this is indicative of skimming. The wire transfers and checks transactions when posted to the bank accounts are historical and should be identified as part of the reconciliation process. The case states, "...many account reconciliations were either not prepared or were not maintained as part of Koss’s accounting records. To the extent that reconciliations were conducted, they were improperly performed by the same persons who initiated or recorded the transactions (i.e. Sachdeva or Mulvaney)"
Accounts receivable ending balance= Beginning balance +sales on Account - cash receipts -sales returns and allowances- charge of uncollectible account
Accounts Receivable has good separation of duties and strong internal controls such as control numbers and reconciliations to sales and bank statements. One weakness in the Accounts receivable system is the accounting supervisor approves summary entries and reconciles the general ledger account, which could indicate a weakness with segregation of duties. We recommend that the controller approves of summary entries to segregate these duties.
Transactional Processing The accounting software packages developed and distributed by Sage and Microsoft, respectively, each use their own methods for recording accounting information. Sage 50. There are three different areas that must be discussed. These are the revenue, expenditure, and financing cycles. These areas are written about from the author's own knowledge from using the software, as learned from the book by Carol Yacht (2013).
Accounting is the language of business. Accounting records and processes financial information into an accessible format that can be understood by anybody in the business world. It is defined in business that accounting is “the recording, measurement, and interpretation of financial information.” (Ferrell, Hirt, Ferrell, 2016, p. 286). Companies uses accounting tools to evaluate organizational operations. Accountants summarize the information from a firm’s business transactions in various financial statements for a variety of stockholders. There is a lot of business failures that happen because of information that is “hidden” in the financial statements. Cash flow is the greatest concern of management. For businesses to succeed, they need
This pronouncement required the deferral method of accounting for income taxes. When the accounting net income exceeded taxable net income, balancing credit should be recognized, when the taxable net income exceeded the accounting, a balancing debit should be recognized. This was considered a deferred credit and a deferred debit. Deferred charges and credits were default classification and were placed on the Balance Sheet in what was called "no man's land," or some undefined region, between liabilities and owner's equity for deferred credits and between assets and liabilities for deferred charges. Under APB Opinion #11 it was believed that the balancing credits and debits would eventually reverse and cancel out and therefore it was to be treated as a temporary measure.
The terms debit and credit are used in recording business transactions which will indicate the increases or decreases of a specific account, be it an asset, liability, owner’s equity or capital, revenue, expenses and the owner’s drawings. Being on the left side of the equation, all assets will increase on the left side or debit side and its corresponding “partner” account like for example, the investment of an owner, will take the right side or credit side.
All the goods and services used in the company need to be paid timely. These include payment to be made to vendors for the goods, payment of wages and salaries, payment to be made for electricity, water, fuel and other direct expenses and for the payment of indirect expenses including the administrative and financial expenses. A firm need to maintain cash balance to make the payment of these expenses timely so that the business can operate without any hurdles. To quote Bollen, “Cash is an oil to lubricate the ever-turning wheels of business: without it, he process grinds to stop.”
1. Cash: There is an increase of cash as of June 30 by $31,677. This could be the result of the company making sales for cash or making purchases on credit which would explain the increase in accounts payable. Also, payments of insurance were credited from prepaid insurance resulting in no cash being removed from the account.
Cash Flow Statement. This statement gives a summary of movement in cash and bank balances over a given financial period – cash within the company.
Every transaction gets entered twice in financial records. If one day you sold three gold coins ' worth of pepper, you would write that the amount of cash you had went up by three gold coins. You would also write in that the amount of pepper you had went down by three gold coins ' worth. Before double-entry, people just kept diaries and counted their money at the end of the day. This innovation allowed merchants to see every aspect of their business in neat little rows. (Kestenbaum,
The basis of accounting consists of two main parts. First is the cash or modified accrual basis and the other is the accrual basis. Both the cash and accrual basis of accounting are widely accepted principles within the accounting field that assist with keeping accurate notation of the income and expenses when dealing with a business. The main difference between the cash and accrual basis is the time at which revenues and expenses are reported on the income statement. (1) A specific criterion has to be followed in order to choose which accounting method should be executed. (1)
All the transactions related inter-branch cash transfers of this audit term has verified with payment/receipt vouchers along with related responded vouchers, Cash movement register and found to be correct. The balance between H.O. Books and Branch books tallied up to 03.11.2013.
Cash is known as the king in business world. Thus king (cash) should be managed well to be in the business and also to grow financially. Cash management is key to run the business efficiently that will also avoid the bankruptcy. Cash management is all about collecting, managing, investing and disbursement of the cash. A very important and key factor for the company 's stability. Cash management are generally taken care by treasurers of the company or the business managers.
This shows the total balance of credits and debits are equality after the temporary accounts had being zero and didn’t list on the post-closing trial balance. This is the end of accounting cycle and it will start again with the first step in the next accounting