Recording and Accounting for Cash Transactions

Interactive learning module - Fill in the blanks to test your knowledge

Instructions

Fill in the blanks in the statements below to test your knowledge. Click "Check Answers" to see your results. If in doubt, you should go back to your BPP Interactive Text and revise first.

Basic Transactions

Ashows which invoices a payment covers.

A receipt is a document given by the seller to the

when goods change hands in exchange for

Payment Methods

Payment for goods sold can be made by

Other types of payment by customers include banker's draft,

order and

debit.

Internet payments are made usingcards and

cards or by

TRY QUESTIONS 2.1 TO 2.5

Clearing and Security

Clearing is the mechanism for obtaining

for cheques.

Security procedures when banking cash should include

the time of the visit to the bank, varying the

taking the money there, sending more than one person and using a

firm.

TRY QUESTIONS 2.6 TO 2.10

Cash Book

help to control cash receipts by checking the business cash book to the bank statement.

Cash receipts are posted from the cash book to the

An analysed cash book is a book of

entry.

TRY QUESTIONS 2.11 TO 2.15

Controls Over Payments and Expenses

Controls over payments will include

of the payment, cheque requisition forms and

documents.

Anis used to reimburse employees' expenses.

Payment can be made in the same ways that the business receives monies for goods sold. Of particular importance are

TRY QUESTIONS 2.16 TO 2.23

Petty Cash

When recording payments, an analysed cash book is used to split payments between sales tax, payments to suppliers, expenses, discounts

, cash purchases and petty cash.

Totals are posted from the

book to the general ledger.

TRY QUESTIONS 2.24 TO 2.29

Petty cash should be used for

items of expense.

Petty cash must be kept secure and all payments must be properly

Ansystem has a maximum amount of money in petty cash, usually enough to cover payments for about one month.

Petty cash transactions are recorded and analysed in the

book.

TRY QUESTIONS 2.30 TO 2.35

Bank Reconciliation

Acompares the balance of cash in the business records to the balance held by the bank.

Any errors or

found should be adjusted in the cash book.

The corrected balance in the cash book should be reconciled to the balance on the bank statement by taking account of

TRY QUESTIONS 2.36 TO 2.41

Possible Pitfalls

Mistakes you know you should avoid:

Forgetting that all the ways of receiving money can also be used to make payments.
Bank reconciliations are important as there may be computational questions in the exam.
Ignoring controls procedures. Exam questions often ask about these.
Ignoring sales tax.