Chapter 8 - Recording Monies Received

CHAPTER 8 Recording monies

Contents    

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

Controls over recording receipts Segregation of duties 

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

Bank reconciliations  

Exam focus ?

Cash registers What is it? 



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

Security and controls    



Who can access Training Work observation The maximum possible amount of preset information Periodic info analysis

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

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

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 discounts C Documents used to reconcile the bank balance with the cash book D Documents used to record refunds from suppliers Answer: A