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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.
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.
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.