Salient points:

1.0 Cash is the standard for measurement and accounting and requires special procedures to assure that proper physical and accounting control is maintained. Temporarily available excess cash is often invested to generate revenue from an otherwise unproductive assets

2.0 Whether it should be included as cash is often based on whether the item would be accepted for deposits at face value by a bank.

  • Examples of items included as cash-deposits in banks,currency and coin, personal cheques, traveler cheques, cashiers’ cheques, bank draft, money orders, unrestricted foreign bank deposits
  • Examples of items not included as cash-postage stamps, post-dated cheques, cheques deposited but returned, cash-due memorandums,IOUs from staff, securites(stocks & bonds) and balances in closed banks

3.0 Cash is reported as Current Asset in the Balance Sheet. Separate accounts are normally maintained for various cash items but the accounts are combined as Cash for presentation on the balance sheet.

4.0 Both accounting controls and administrative controls ar part of the overall system of internal control. Control of cash is part of the system of internal control. There are five basic characteristics of internal control for cash namely:

  • Specifically assigned responsibility for handling cash receipts;
  • Separation of handling and recording of cash transactions;
  • Daily deposit of all cash received;
  • Voucher system to control cash payments and
  • Internal audit at irregular intervals.

5.0 Reconciliation of bank balances with book balance is an important part of control over cash.




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