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Title: Basics of Proof of Cash for Accounting and Auditing
Description: This is a class note for the basics of Proof of Cash for Accounting and Auditing. It is written recently and will comply with the GAAP.

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08
...
2020
Proof of Cash
-

A better type of bank recon
...
first assumption-> current month ang error
2
...
third assumption -> if the problem does not state who is wrong,
a
...
fourth assumption -> any debits to cash would be part of their receipts
-> any credit would be part of their disbursements

*The errors would come from the receipts or disbursements of the month
* Receipts – Directly proportional to ending balance
* Disbursements -> Indirectly proportional to ending balance
Can variously proof of cash errors or Reconciling items be classified into Major Types or Groupings

Cash Receipts
a
...
Overstated – Type 2
Cash Disbursements
a
...
Overstated – Type 4

*Erroneous ->may nadagdag (OVER)

The adjusted bank balance would ALWAYS be the correct amount of cash
...

11/30

Unadjusted BANK
Balance
Receipts under
11/30 - Deposit in
Transit
Receipts under
12/31 - Deposit in
Transit
Receipts OVER
11/30
Receipts OVER
12/31
Disbursements
under 11/30
Disbursements
under 12/30
Disbursements
Over 11/30

500

December
Receipts
400

5

(5)

December
Disbursements
300

7

(4)

600

7

(4)
(6)

(8)

(6)
(8)
9

1

12/31

(1)

(9)

Disbursements
Over 11/30
abAdjusted Bank
Balances

494

395

(2)

2

295

594

Adjacent, opposite sign
Malayo, same sign
-

Ma’am Bravo pla

Bank reconciliation

Bank balance

Book balance

Balance per bank statement Unadjusted

Balance per book unadjusted

Add: Deposit in transit
Less: Outstanding Checks

Add: Credit memo
Less: Debit memo

Errors:

Errors:

Balance per bank adjusted

Balance per book adjusted

Erroneous Receipts is NOT DEPOSIT IN TRANSIT
A
...
Corrected Last
month
2
...
Committed Current
Month
1
...
Corrected Next
Month

Receipts (current Month)

Disbursements (current Month)

No Effect

No Effect

No Effect

(xx)

(xx)

(xx)

(xx)

No Effect

Erroneous Disbursement is NOT OUTSTANDING CHECK
A
...
Corrected Last
Month
2
...
Committed current
Month
1
...
Corrected Next
Month

Receipts (Current Month)

Disbursements (Current Month)

No Effect

No Effect

(xx)

No Effect

(xx)

(xx)

No Effect

(xx)

The damage has been done, mali na talga




Adjusted Bank Cash Balance should be EQUAL to Book Cash Balance
Total Debits and total credits to cash is also known as book debits and book credits

Total Book debits = Deposits recorded by the company current month + credit memo of previous month
only recoded in this month
Total Bank Credits = Deposits recorded this current month + credit memo recorded current month

Cash of the book = Liability of the bank

Specific Error

Erring Party?

Rec or Disb?

Rec/Disb
Under or Over?

ERRONEOUS
BANK CREDITS
ERRONEOUS
BANK DEBITS
Note Collected by
the Bank
Bank Service
charge
Erroneous Book
Debits
Erroneous Book
Credits

Bank

Receivable

Over

Type 2

Bank

Disbursement

Over

Type 4

Book

Receivable

Under

Type 1

Book

Disbursement

Under

Type 3

Book

Receipts

Over

Type 2

Book

Disbursements

Over

Type 4

Error Type?


Title: Basics of Proof of Cash for Accounting and Auditing
Description: This is a class note for the basics of Proof of Cash for Accounting and Auditing. It is written recently and will comply with the GAAP.