Cash Receipts Journal Flashcards, test questions and answers

Discover flashcards, test exam answers, and assignments to help you learn more about Cash Receipts Journal and other subjects. Don’t miss the chance to use them for more effective college education. Use our database of questions and answers on Cash Receipts Journal and get quick solutions for your test.

What is Cash Receipts Journal?

A Cash Receipts Journal is an accounting tool used to record all transactions that involve the receipt of cash in a business. It is a form of bookkeeping journal that tracks all cash payments received from customers and other sources and is used to update the company’s general ledger. The Cash Receipts Journal provides accurate records for auditing, taxes, budgeting and financial reporting purposes.Cash receipts can be broken down into two categories: direct (cash sales) and indirect (non-cash sources). Direct cash receipts are those from customers who have paid with cash or check on goods purchased. These are usually recorded as Sales Invoices in the Sales Ledger and then later posted into the Cash Receipts Journal. Indirect cash receipts include bank deposits, credit card payments, transfers from other accounts, etc., which are not directly associated with a specific sale or purchase but are still considered income for the business. When entering transactions into the Cash Receipts Journal, it is important to use proper documentation such as invoices or checks that includes details like invoice numbers, customer name/address/phone number, amount due/received/overpayment if applicable. Additionally include a description of what was purchased; this helps ensure accuracy when reconciling accounts at month end. Once completed entries are verified by someone authorized by management such as an accountant or bookkeeper, they should also be stored for future reference in case any discrepancies arise during an audit or tax assessment period. The Cash Receipts Journal provides an organized way to track incoming funds so businesses can accurately assess their financial position on a regular basis – allowing them to make informed decisions on how best allocate resources while keeping costs under control. It also helps prevent overpayments which can cause serious issues down the line if left unchecked – something every business should strive to avoid.