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Chapter-3-Proof-of-Cash 2

This document discusses proof of cash, which involves reconciling cash balances between accounting records and bank statements. It provides 3 methods for proof of cash, and includes formulas for computing book and bank balances, deposits in transit, outstanding checks, and reconciling the overall cash position. Key aspects covered are reconciling cash receipts and disbursements between months, and handling reconciling items that are omitted, to determine if any cash shortages or overages exist.

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Andrea Caparoso
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405 views2 pages

Chapter-3-Proof-of-Cash 2

This document discusses proof of cash, which involves reconciling cash balances between accounting records and bank statements. It provides 3 methods for proof of cash, and includes formulas for computing book and bank balances, deposits in transit, outstanding checks, and reconciling the overall cash position. Key aspects covered are reconciling cash receipts and disbursements between months, and handling reconciling items that are omitted, to determine if any cash shortages or overages exist.

Uploaded by

Andrea Caparoso
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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CHAPTER 3: PROOF OF CASH

PROOF OF CASH VARIOUS FORMULAS


1. Two-dated bank reconciliation
 Literally involves two dates. (magkasunod 1. FORMULA IN COMPUTING THE BOOK AND
na buwan ang ginagawa para makita kung BANK BALANCES
pano ba nagkaron ng inflows and outflows BOOK BALANCE BANK BALANCE
sa cash). Balances per book- Px Balances per bank- Pxx
2. Expanded reconciliation that includes the beginning of the x beginning of the
proof of: month month
a. Recepits (from one month to the Add: Book debits/cash xx Add: Bank credits/cash xx
next) inflow for the month inflow for the month
b. Disbursements (from one month to TOTAL xx TOTAL xx
the next) Less: Book xx Less: Bank Debits/Cash xx
Credits/Cash outflows outflows for the month
3. Useful in discovering discrepancies in cash
for the month
handling. (pinag uusapan dito, either cash
Balance per book- end Px Balance per bank- end Pxx
shortage or overage). Cash receipts have been
of month x of month
recorded but have not been deposited. (thru
proof of cash, makikita if pumasok yung cash 2. FORMULA IN COMPUTING THE DEPOSIT IN
sa bank. Kasi yung disbursements is makikita TRANSIT AND OUTSTANDING CHECKS
talaga through checks eh. Once na ibinigay or
DEPOSIT IN TRANSIT OUTSTANDING CHECKS
ibinayad mo na siya sa supplier, magiging DIT- beginning of the Pxx OC- beginning of the Pxx
outstanding lang naman siya kapag hindi niya month month
pina encash or dineposit. But basically, once Add: Cash receipts xx Add: checks drawn by xx
na na encash na or na deposit, aappear na deposited during the the
yons a bank statement the following month. month company/depositor
Outstanding check siya sa january, pero next during the month
month hindi na siya outstanding check. Unless Total deposits to be xx Total checks to be xx
otherwise di pa rin pina encash or deposit. But acknowledged by paid by the bank
basically, makikita ron yung movement ng bank
cash inflow Less: Deposit xx Less: checks paid by xx
acknowledged by the the bank during the
Pero ang binabantayan talaga dito is yung bank during the month month
mga recorded cash receipts na BAKA hindi DIT- end of month Pxx OC- end of month Pxx
nadeposit. Kaya kailangan may proof na may
receipt and disbursement). 3. FORMULA FOR PROOF OF CASH

4. Easy to prepare when no information is


missing.
(kung given lahat ng reconciling items, wala
kang problem. Nagkakaroon lang ng
accounting issue kapag>> next no.)

5. It becomes complicated when one or a


combination of the following are omitted:
(ibig sabihin, yan ay unknown or di binigay sa
problem).
a. Book Balance- beginning and ending
b. Bank Balance- beginning and ending
c. Deposit in Transit- beginning and ending
d. Outstanding Checks- beginning and
ending
PICTURE – IMPORTANT NOTE!
*put all the balances first of the beginning and
ending balance.
*in the beginning balance, last month is the key
word. Kasi yun yung magiging beginning balance
eh. For example, ending balance of the month of
february, will become beginning balance of the
first month.
*in the ending balance, this month is the key word.
*technique: kapag magkadikit yung item, salungat
yung operation. For example sa credit memo-last
month. Add then subtract katabi. On the other
hand, pag magkalayo yung item, same yung
operation nila. For example sa credit memo-this
month. BUT HINDI LAGI GANYAN YUNG CASE.

1. FIRST PICTURE
 In credit memo- last month , why the receipts
is deducted? Because hindi na dapat aappear
sa ending balance. Dapat 0 na. kasi last month
pa yan. Malamang sa malamang, narecognize
na yan this month. Malamang, yung credit
memo-last month na yan IN THE BEGINNING,
narecognize na yan ni book. Kaya kailangang
alisin na yan dyan.
 In credit memo-this month , yun ang dapat na
mag appear as part of receipts. Kasi ito, di pa
yan recorded sa iyo pero dahil reconciling
items pa siya, kailangan pa siyang umappear
dyan. At makikita na may ending balance na
siya.
 In debit memo-last month, kung mapapansin
is inalis sa disbursements, kasi nga last month
pa siya. Kaya dapat di na yan mag appear sa
ending balance kasi recognize na yan ng book.
 In debit memo-this month , kailangan mag
appear pa rin siya sa ending balance. Kasi di pa
siya recorded.

2. SECOND PICTURE
 Same logic sa books.

FORMS OF PROOF OF CASH


1. Adjusted Balance Method
2. Book th Bank Method
3. Bank to Book Method

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