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anything that is not on credit

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In accounting terms 'cash' means

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coins bank notes cheques debit card credit card electronic transfer payments

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Cash sales include

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recorded at once

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When cash is received by a business it must be

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a cash till

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In most retail businesses the recording of cash is done by

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a simple one with a till roll which gives a total of all receipts during the day (this can be checked with the amount in the till at the end of the day) one that store the amount of sale totals electronically and update stock levels as each sale is made

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Cash tills vary in complexity, options available include

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remittance list

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If you receive cheques/other money by post you may have a

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what money you have been sent in payment for goods or services

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Remittance simply means

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date sender amount and then this would be totalled at regular periods)

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If cheques/other money is received you would record the

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the remittance list with cash received list

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If there is no till, the you may combine

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Cash book

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Whatever methods you use, it will eventually be recorded in the

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record all the monetary transactions of a business

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A cash book is used to

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have a column for bank transactions and a column for cash transactions

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Typically a cash book will

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actually banked (so it is quite possibly to have cheque amounts in the 'cash' column)

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Transactions are 'cash' until they are

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left are for 'receiving' and the credits on the right are for 'giving'

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The cash book follows the same principles as any other 'T' account. The debits on the

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book of prime entry and part of the double entry (therefore, any entry in the cash book will need a balancing entry in some other account)

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The cash book usually doubles as a

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cash column. It is not necessary for them to know how much cash is left on the premises

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The cash book will look different in different companies, some who bank all of their cash daily may not have a

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check can be kept on what the amounts in the cash book are for

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Some companies will need to analyse their receipts and (particularly) their payments so that a

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credit sale, except that the cash book is used instead of the Sales Ledger or the Sales Ledger Control

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Recording a cash sale is the same as recording a

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sales

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Not all cash receipts will be for

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- cash book (on the left under bank) - Sales Ledger Control Account (right - credit) - Subsidiary Sales Ledger (right - credit)

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If a credit customer pays by cheque, this is recorded in the

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increasing what the customer owes

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In the Sales Ledger and the Sales Ledger Control is it easier to think of debit enteries

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reducing the amount the amount owes

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In the Sales Ledger and the Sales Ledger Control is it easier to think of credit enteries

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contra (this means opposite or against). the contra entry will be identifed by a 'c' In accounting terms it is when one account is set off against an opposite entry in another

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When the cash is paid into the bank, this needs to be reflected in the cash book. This is done by means of a

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amount of cash

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When cash is paid into the bank we will increase the amount in the bank and decrease the

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Bank (c) - the cash column will be credited with the cash (the right as this have been 'given' to the bank) Cash (c) - the bank column has been debited as the amount has been 'received' by the bank The details column shows where the other side of the double entry is and explained by the (c) meaning contra entry

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When cash is paid into the bank, the cash book will look like

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to the rest of the main ledger daily, weekly or even monthly

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There will be many entries in the cash book. Since it is a book of prime entry, all cash and bank transactions will be shown here, and it may only be updated

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time consuming and could lead to errors. For this reason, the cash book often has analysis columns

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By the time we update the rest of the main ledger there may be a lot of entries and sorting out the cash sales from the payments by credit customers can be

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bank at the end of the previous month

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The balance b/d is the amount of cash and money at the

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cash column, while the net amount is shown in the cash sales column and the VAT amount is shown in the VAT column

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Cash sales - this is the record of a cash sale. The total amount of cash paid by the customer is entered in the

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Main Ledger entries (ML) Sales Ledger entries (SL)

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The folio column shows

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accounts because it is not clear at the time of raising the invoice whether the discount will be taken or not

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Only settlements discounts need to be recorded in the

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- Rental income from letting out spare office space - Income from a loan - Money introduced from the owner's private funds (known as capital)

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Entries in the Sundry column would include

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cash received in the month plus the opening balance. It may not be the cash in hand just the cash receipts.

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The cash column is the total of all

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other side of the cash book

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Cash payments will be shown on the

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paid into the bank in the month plus the opening balance. It may not be the amount you have in the bank as only dealt with bank receipts.

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The bank column will show all the amounts

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other side of the cash book (the payments or credit sales)

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Bank payments will have been made and shown on the

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opening balances should equal the sum of the other totals but not the discounts allowed)

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When you have analysed the cash book you can check the accuracy of your totals. The sum of the cash book and bank columns less the

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- credit Sales Account - credit VAT Account - credit Sales Ledger Control Account (and discount amount) - debit Discounts Allowed Account

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The double entry for the other side of the cash book are

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amount they have paid and the discount allowed

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Remember to update the Sales Ledger. The customer accounts must be updated with the

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credit customer account (and discount allowed as a separate line)

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The double entry for the other side of the cash book for Sales Ledgers (customer accounts) will be

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a cash transaction and as such is not shown in the cash or bank columns of the cash book

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The discount allowed is included in the main ledger because the discount is not

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cash book as a means of showing why the receipt from the customer was not the total amount of the invoice. Since it is not shown in the cash book or bank columns of the cash book, it needs its own double entry

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Strictly speaking a discount is not a cash book entry at all, but it is shown in the

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document which usually accompanies the cheque saying what the payment is for.

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A remittance advice is a

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Typically it will show the invoices to be paid and the credit notes and discounts taken. Some companies provide a tear-off slip with their statement of account

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Typically a remittance advice will

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brackets. Putting figures in brackets is a common (and acceptable) way of showing negative amounts

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Figures on a remittance advice to be taken off the invoices to be paid are in

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the company what transactions they payment was for and for the supplier shows what invoices are outstanding

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A remittance advice is important to both parties, it shows

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BACS transfer

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Another method of payment which you may receive is a

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Bankers Automated Clearing Serivce

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BACS stands for

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Standing Orders, Direct Debits and Direct Credits

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BACS is the company which organises/sets the rules for

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instruction a bank account holder gives to their bank to pay a set amount at regular intervals to another account. The instruction to pay comes from the person sending the money

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A standing order is a

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as a standing order except that the instructions to pay come from the person receiving the money

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A direct debit is the same

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paying wages and salaries, but it also used by many companies to pay suppliers

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A direct credit is mainly used for

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1968, and takes 3 days to clear

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BACS started in

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Clearing House Automatic Payment System

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CHAPS stands for

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same day transfers, but can be expensive

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CHAPS offer

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VocaLink to set up another system which would be quicker and cheaper

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The government commissioned a company called

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Faster Payments Service

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FPS stands for

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27th May 2008

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FPS processed the first transaction on

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bank accounts almost instantaneously and currently runs along side bacs

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FPS transfers money between

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a BACS (or FPS) remittance advice

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To ensure the receiving company knows they are getting an automated payment you can send

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Electronic Funds Transfer at Point of Sale

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EFTPOS stands for

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accepting debit cards and credit cards

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EFTPOS is the method used for

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- contacts the store's bank electronically about the transaction. - a message is also sent to the customer's bank - the funds will be transferred between the 2 accounts unless their is a problem - it only takes a few seconds

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Once the customer enters their card into an on-site machine and enters their pin the equipment

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CHIP and PIN The chip is the embedded integrated circuit which processes the information It is the gold coloured square which can be seen on the face of the card

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The cards now issued (use with EFTPOS) are called

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- the card has a logo and a chip - the card is in date (valid from and expires on) - the card has not been tampered with and there is a signature on the reverse

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If you need to take payment from a customer with a debit or credit card you will need to make sure that

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- customers with the old style card which has not yet been updated - some disabled cardholders - cardholders from countries which have not yet upgraded to chip and PIN

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The old style of chip and signature (or even the old magnetic strip and signature) can no longer be guarantee for payment. There are 3 exceptions for this

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credit or debit card transactions must be authorised before being processed

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A floor limit is the payment amount above which

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by the card company

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The floor limit can vary from business to business and is set

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electronically. However, it may occasionally still be used if the customer does not have a chip and PIN card or if there is a problem in the connection to the card company's electronic authorisation system,

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The floor limit has to a certain extent become unnecessary, as authorisation of debit or credit cards is done

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zero

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The floor limit for all telephone, mail order or internet transactions is

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pay a specific amount to another person (the payee)

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A cheque is a written instruction to a bank (the drawee) to

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- that it is signed - that the date is today's date or earlier -the words and the figures are correct

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When you receive a cheque you must check the following points

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drawer and the drawee are one and the same

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A banker's draft is almost identical to a cheque except that the

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large purchases

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A customer can order a banker's draft from the bank, usually for

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customer before it issues the draft

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For a banker's draft the bank will take the funds from the

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funds for payment are from the bank itself rather than the customer's account. In a way it is more secure than a cheuque

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The advantage of a banker's draft is that

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cheques for people without bank accounts

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Postal orders are essentially

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Post Office and used as payment for goods and services

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Postal orders can be purchased from the

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paying by post of a cheque is not possible

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Postal Orders are particularly useful when

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that the cheque can only be paid into the payee's bank account

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The 2 vertical lines on a cheque with the words 'a/c payee' written between means

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lost cheque is virtually useless to someone who finds it

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Having 'a/c payee' is a security measure so that a

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fully transferable, meaning that is could be passed on to someone else if it was signed on the back (endorsed)

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To find a cheque issued by a bank without the 'a/c' crossing is very rare nowadays, but if it has not got this then it would be

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paid into a bank account (i.e. cannot be exchanged for cash at the bank)

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A crossing without words on a cheque means it has to be

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guarantees payment of the cheque up to a certain limit set by the bank, whether or not the customer has enough funds in their account to cover it. (often this is the same card as the debit or credit card)

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Cheque guarantee cards are useful to the payee as it

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write the cards number on the back of the cheque

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When receiving a cheque with a cheque guarantee card you will need to

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transaction

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A cheque guarantee card is only valid per

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there can be no dispute over payment. The coins and notes are legal tender and cannot be disputed

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Accepting cash has the advantage as

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they belong to whoever bears them, so theft is a real threat

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Accepting cash has the disadvantage that

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for any amount as can £1 and £2 coins

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Bank notes can be used

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£10

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50p and 20p coins are legal tender up to

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£5

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10p and 5p coins are legal tender up to

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20p

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2p and 1p coins are legal tender up to

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to refuse them (though customer relations may suffer if you do!)

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If you receive more than the legal tender (coins) you are entitled

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exact amount as legally you cannot demand change, however, the vast majority of suppliers (if not all suppliers) will give change

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Payment of coins and notes should be for the

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sure to take off the till float to arrive at the takings of the day

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When you check the contents of your till at the end of the day, you must remember to be

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add on the till float you had at the beginning of the day

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If you are comparing the contents of the till with the till roll, then you must remember to

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- cash should be kept in the till and should be closed except when actually being used - if you don't keep a till the money should be kept in a cash box or safe which is locked. They keys to the box or safe should be limited and kept away - cash should be banked as soon as possible - the contents of the till should be checked with the till roll at least every day, preferably by someone else other than the person taking the cash payments

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When taking payments by cash you must be aware of the security problems

Cash Receipts and Cash Sales (Chp 5) – Flashcards

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