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EQUIVALENTS
IMPREST SYSTEM
System of control of cash which requires that all
cash receipts should be deposited intact and all
cash disbursements should be made by means of
check
PRESENTATION AND MEASUREMENT OF CASH IN
THE BALANCE SHEET
A. CASH ITEMS
1. PETTY CASH FUND
2. CASH IN BANK
3. POSTAL MONEY ORDER
4. MANAGERS CHECK AND TRAVELLERS CHECK
5. UNDELIVERED OR UNRELEASED CHECKS
6. COMPANYS POSTDATED CHECK AND STALE CHECK
7. COMPENSATING BALANCES ( UNRESTRICTED )
8. CASH SET ASIDE FOR CURRENT OPERATIONS
9. FOREIGN CURRENCY- cash in foreign currency should be
translated to Philippine currency using the exchange rate at
the balance sheet date ( closing rate )
Journal Entry:
NO ENTRY
REPLENISHMENT OF FUND
Journal entry:
EXPENSES ( VARIOUS ) XX
CASH IN BANK XX
NOTE:
Journal entry:
EXPENSES XX
PETTY CASH FUND XX
NOTE:
1. To avoid understatement of expenses
2. To avoid overstatement of assets
TO INCREASE OR DECREASE PETTY CASH FUND
Journal entry:
CASH IN BANK XX
PETTY CASH FUND XX
( To decrease PCF )
CASH SHORT/OVER ( CSO )
- Nominal account that is debited for shortages and
credited for overages in the Petty Cash Fund
- Error in making change fund or failure to obtain receipts
for very small amounts
- Incorrect recording of amounts and theft/loss
- Cash shortage is debited to miscellaneous expense at the
end of the period
- Cash overage is credited to miscellaneous income and
deposited to general cash account at the of the period
and the journal entry is
Cash in Bank xx
Miscellaneous Income xx
BANK RECONCILIATION
Bank Reconciliation- report that explains the
difference between the book ( company )
balance of cash and the cash balance reported
in the bank statement
PROFORMA RECONCILIATION
PROFORMA RECONCILIATION
Book balance xx
Add: Credit memos xx
Outstanding checks xx xx
Total xx
Less: Debit memos xx
Deposits in transit xx xx
Bank balance xx
BANK TO BOOK METHOD
Under this method, the bank balance is reconciled with the book
balance or the bank balance is adjusted to equal the book balance
PROFORMA RECONCILIATION
Bank balance xx
Add: Deposits in transit xx
Debit memos xx xx
Total xx
Less: Outstanding checks xx
Credit memos xx xx
Book balance xx
DEPOSITS IN TRANSIT
Deposit in transit, beginning of the month XX
Add: Cash receipts reflected in the companys record during
the month* XX
Total XX
Less: Deposits during the month as reflected in the
bank statement ** XX
Deposit in transit, end of the month XX
*The amount does not necessarily represent credits in the companys records. If
the total of the credits to the cash account is given, any debit memo in
PREVIOUS month should bee excluded
**The amount does not necessarily represent debits ( charges ) in the bank
statement. If the total of charges in the bank statement is given, any debit
memo for the CURRENT month should be excluded
PROOF OF CASH
Reconciles the beginning and ending
balances of cash for the month, as well as
the recorded receipts and disbursements
made by the bank and by the depositor
company
CASH IN BANK
COMPANY X