Accounting For Cash

1. Accounting For Cash • Cash includes • Currency, coins, money orders on hand • Checking and money market accounts • Undeposited checks on hand • Cash equivalents • Accounting for cash • Each type of cash or particular account will have a separate account in the ledger • Asset: Current Asset: Normal debit balance • Debits are increases and credits are decreases • Can you name some of the sources of cash for a typical business?

2. Control of Cash • Cash Receipts: • Separation of custodial and accounting duties • Cash Registers • Recording cash receipts intact • What does this mean? • Bank statement reconciliation • Analysis of sales returns and discounts

3. Control of Cash Disbursements • Petty cash fund • Voucher system • All expenditures are paid as the result of submission of an approved voucher with attachments • Proper approval of cash disbursements • Separation of custodial and accounting duties • Bank statement reconciliation • Purchase returns and allowances

4. Balance per bank 200 Deposits in transit 25 Outstanding checks (15) Correct bank bal. 210 Balance per books 207 Interest earned 5 Bank charges ( 2) Correct book bal. 210 Bank Statement Reconciliation Correction of books would require journal entries Cash 5 and Bank Charges 2 Interest Revenue 5 Cash 2

5. Petty Cash Transactions • Establishment of the Fund • Debit Petty Cash and Credit Cash in Bank • Disbursements from the fund • Should be receipted and approved by the petty cash custodian • Replenishment of the fund • Debit expense accounts as indicated by the receipts and credit Cash in Bank • Additions (deductions) to the fund • Debit Petty cash for fund increases and credit Petty cash for fund decreases