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5 August, 2015 - 14:41
  • Money
  • Prompt payment for goods or services in currency or by check

Cash is necessary for finalization of business transactions.

  • With respect to special journals, and specialized ledgers, or prime books of accounting, cash control forms one of the main motivating factors for the system of use.
    • Separating bookkeeping from cash handling as a form of internal fraud control. Similarly, job rotation and enforced holidays and limited overtime help to prevent cooking of books.
    • centralising payment and receipts of cash for better tracking and easier bank reconciliation.
    • documents that support bookentries, such as invoices and receipts issued, can be numbered , so that any lost numbers in a series can be accounted for , without relying on just the bookkeeping
  • cash budgetting is like a concession that despite accrual accounting making the tracking of credit sales and purchases easier, it is still necessary to minimise the risk of a cash flow problem by trying to predict how much cash is being used or received for a given period . Estimation are often made in terms of percentages of a period income or expense arriving in subsequent periods, and with income, a percentage of eventual bad debt ( with expense, there is usually no deliberate planning of jibbing creditors ). After adding the different stages of cash collection for a given period (e.g. a month), a projection can be made as to what the cash balance may be, or what remains to be collected in trade debtors balance, and a plan for cash outflows can be made (e.g. how much to pay the creditors for each period). Financing cash flow , with interest, principal repayments, and projected borrowing needs, can also be factored out period by period. Cash budgetting falls partly in management accounting.