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CHAPTER 9 Controls Over Cash and Petty Cash Payments: Learning Outcome

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This document discusses internal controls over cash and petty cash payments. It examines establishing and maintaining a petty cash system, including general internal controls over cash receipts and payments, petty cash advance accounts, petty cash flowcharts, vouchers, and GST considerations. The goal is to learn internal controls over cash and how to properly establish and control a petty cash system.

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CHAPTER 9 Controls Over Cash and Petty Cash Payments: Learning Outcome

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CJ
26 views14 pages
This document discusses internal controls over cash and petty cash payments. It examines establishing and maintaining a petty cash system, including general internal controls over cash receipts and payments, petty cash advance accounts, petty cash flowcharts, vouchers, and GST considerations. The goal is to learn internal controls over cash and how to properly establish and control a petty cash system.

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This document discusses internal controls over cash and petty cash payments. It examines establishing and maintaining a petty cash system, including general internal controls over cash receipts and payments, petty cash advance accounts, petty cash flowcharts, vouchers, and GST considerations. The goal is to learn internal controls over cash and how to properly establish and control a petty cash system.

Copyright:

© All Rights Reserved
Download as PPT, PDF, TXT or read online from Scribd
Download as ppt, pdf, or txt
26 views14 pages

CHAPTER 9 Controls Over Cash and Petty Cash Payments: Learning Outcome

Uploaded by

CJ
This document discusses internal controls over cash and petty cash payments. It examines establishing and maintaining a petty cash system, including general internal controls over cash receipts and payments, petty cash advance accounts, petty cash flowcharts, vouchers, and GST considerations. The goal is to learn internal controls over cash and how to properly establish and control a petty cash system.

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© All Rights Reserved
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CHAPTER 9 Controls over

cash and petty cash payments

Learning outcome
To examine internal controls over
cash and to establish and maintain a
petty cash system

PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis
9-1
 2011 McGraw-Hill Australia Pty Ltd
KEY TERMS
• Internal controls over cash
• Petty cash payments
• Petty cash flowchart
• The petty cash book and ledger accounts

PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis
 2011 McGraw-Hill Australia Pty Ltd 9-2
GENERAL INTERNAL CONTROLS
• Keep monies not banked in safe areas
• Segregate duties
• Observe rotation of staff duties
• Use pre-numbered documents in all transactions
• Conduct regular reconciliations of bank accounts,
accounts payable and accounts receivable
• Clearly define staff responsibilities and duties
• Exercise controls over investments

PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis
 2011 McGraw-Hill Australia Pty Ltd 9-3
INTERNAL CONTROLS OVER
CASH RECEIPTS
• Bank daily
• Record mail receipts in remittance book and stamp
‘A/c payee only’ on cheques
• Use pre-numbered receipts and cash register tapes
• Account for all documents, including those cancelled
• Segregate duties
• Conduct regular bank reconciliations
• Reconcile cash register tapes with actual takings

PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis
 2011 McGraw-Hill Australia Pty Ltd 9-4
INTERNAL CONTROLS OVER
CASH PAYMENTS
• Stamp payment cheques ‘not negotiable’
• Ensure electronic payment software secure and
password protected
• Use pre-numbered cheques and documents
• Segregate duties
• Conduct regular bank reconciliations
• Ensure credit card and all payments are properly
authorised

PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis
 2011 McGraw-Hill Australia Pty Ltd 9-5
Reconciliation of daily cash takings
and supplies

PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis
 2011 McGraw-Hill Australia Pty Ltd 9-6
Bank deposit form

PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis
 2011 McGraw-Hill Australia Pty Ltd 9-7
PETTY CASH ADVANCE ACCOUNT
• Petty cash advance is an asset and establishes the
fund
• Petty cash asset account does not change unless petty
cash float is increased
• Increase in petty cash float is recorded in cash
payments journal as:
DR: Petty cash (asset)
CR: Bank (cheque account)

PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis
 2011 McGraw-Hill Australia Pty Ltd 9-8
PETTY CASH ADVANCE ACCOUNT
cont.
Petty cash used for minor expenses:
– taxi or train fares
– tea, coffee, milk
– postage stamps
– small stationery items

Petty cash expenditure is recorded on reimbursement of float in


cash payments journal as:
DR: Various expense a/cs
CR: Bank (cheque account)

PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis
 2011 McGraw-Hill Australia Pty Ltd 9-9
PETTY CASH FLOWCHART
Petty cash advance
established

Payment
Petty cash imprest Voucher Payment
Petty cash book

Cash payments
Journal
Reimbursement

Ledger accounts
for posting
of expenses

PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis
 2011 McGraw-Hill Australia Pty Ltd 9-10
PETTY CASH VOUCHERS
Used to record amounts reimbursed or used from petty cash float

No. 45 Petty Cash Voucher

Date: ……………………………………… 6 June


Paid to: …………………………………. C Chung
For:…………………………………………Travel
Account: ……………………………….Taxi fares
Amount:…………………………$23.00 (incl. GST)
Received: C Chung

Authorised by: T. Tully

Receipts and details of purchase attached to petty cash


voucher

PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis
 2011 McGraw-Hill Australia Pty Ltd 9-11
GST AND PETTY CASH
• GST included in most petty cash transactions
• Petty cash expenditure recorded on reimbursement of
float in cash payments journal as:
DR: Various expense a/cs
GST input tax credits
CR: Bank (cheque account)

PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis
 2011 McGraw-Hill Australia Pty Ltd 9-12
INTERNAL CONTROL AND
SECURITY
• Internal checks and reconciliation completed by
independent officer (only if advance is large)
• Reimbursements authorised by petty cash officer
• Refunds of payments in advance banked and recorded
in cash receipts journal

PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis
 2011 McGraw-Hill Australia Pty Ltd 9-13
SUMMARY
• Petty cash is used for minor expenses
• Petty cash imprest system maintains control over
these cash payments
• A petty cash book and vouchers are used to record
small payments
• GST is recorded on reimbursement

PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis
 2011 McGraw-Hill Australia Pty Ltd 9-14

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