CHAPTER 8Recording monies received

Contents

Controls over recording receipts Cash registers Cash received sheets (remittance lists) Posting cash receipts to the general

ledger

Controls over recording receipts

Receiving and the recording functions are kept separate One person will receive,

count and perhaps bank the money

Another person will record the money received.

What for? Avoiding theft Collusion

Exam focus ?

Segregation of duties Bank reconciliations

Cash registers

To check the amount of money in the cash register at the end of the day against the summary

To record receipts in the cash book

Who can access Training Work observation The maximum

possible amount of preset information

Periodic info analysis

What is it? Security and controls

Cash received sheets (remittance lists)

Manually Pre-printed

Check it out

Solution

Three errors.(a) It is incorrect to try to balance the two discount

columns. The discounts allowed: an expense of the business Discounts received a benefit to the business Should be treated separately and not 'netted off’(b) The cash balance brought down should be $110.31

and not $119.31.(c) The bank balance brought down should be $1,621.48

DR and not $1,621.48 CR, ie it is on the wrong side of the cash book. The added up totals of each side of the bank column would then be $15,842.65.

Posting from cash book

Suppose we wished to post Warren Miles's cash received for 1 September 20X7 to his general ledger. The relevant general ledger accounts are as follows

Posting results

Quiz

1 What is 'segregation of duties' when dealing with cash receipts?

2 The cash book reflects the movement of notes and coins through the business. True or false?

3 Why is a discount allowed column required in the cash book?

4 Is it easier for the operator if the computerized receivables ledger and general ledger are interfaced?

1 The receiving and recording functions are kept separate to avoid theft.

2 False. The cash book records movements through the business bank account. Notes and coins are recorded in the petty cash book.

3 The discount allowed column shows why the full amount of a debt has not been received, for clearing the total amount in the receivables ledger.

4 Yes, because journals updating the general ledger do not have to be manually prepared.

QB 16

Cash received sheets (remittance lists) are best described as

A Documents used to record money received from sales made

B Documents used to record customer discountsC Documents used to reconcile the bank balance

with the cash bookD Documents used to record refunds from

suppliers

Answer: A