Cash Funds Making Accounting Relevant In the workplace, many people handle cash. Protecting cash...
10
Cash Funds Making Accounting Relevant In the workplace, many people handle cash. Protecting cash from theft or loss is important. If you were the owner of a business, what measures would you take to protect cash?
-
Upload
peregrine-andrews -
Category
Documents
-
view
216 -
download
1
Transcript of Cash Funds Making Accounting Relevant In the workplace, many people handle cash. Protecting cash...
Cash FundsCash Funds
Making Accounting Relevant
In the workplace, many people handle
cash. Protecting cash from theft or
loss is important.
Making Accounting Relevant
In the workplace, many people handle
cash. Protecting cash from theft or
loss is important.
If you were the owner of a business,
what measures would you take to
protect cash?
If you were the owner of a business,
what measures would you take to
protect cash?
Section 1 The Change Fund
Section 1 The Change Fund
What You’ll Learn
Why a business needs to have a
small amount of cash on hand.
How to record the entry to establish
a change fund.
How to prove the cash in the cash
register drawer at the end of each
business day.
What You’ll Learn
Why a business needs to have a
small amount of cash on hand.
How to record the entry to establish
a change fund.
How to prove the cash in the cash
register drawer at the end of each
business day.
Why It’s Important
Retail businesses that use a cash
register need to maintain controls
over the change fund and to account
for cash shortages and overages.
Why It’s Important
Retail businesses that use a cash
register need to maintain controls
over the change fund and to account
for cash shortages and overages.
Key Terms
change fund
Key Terms
change fund
Section 1 The Change Fund (cont'd.)Section 1 The Change Fund (cont'd.)
Establishing a Change FundEstablishing a Change Fund used to make change in cash
transactions.
used to make change in cash transactions.
Section 1 The Change Fund (cont'd.)Section 1 The Change Fund (cont'd.)
Business Transaction
On May 1, the accountant for On Your Mark wrote Check 2150 for $100 to establish a change fund.
ANALYSIS Identify 1. The accounts affected are Change Fund and Cash in Bank.
Classify 2. Both Change Fund and Cash in Bank are asset accounts. + / – 3. Change Fund is increased by $100. Cash in Bank is decreased by $100.
Establishing a Change Fund (cont'd.)Establishing a Change Fund (cont'd.)
Section 1 The Change Fund (cont'd.)Section 1 The Change Fund (cont'd.)
Business Transaction (cont'd.)
On May 1, the accountant for On Your Mark wrote Check 2150 for $100 to establish a change fund.
DEBIT-CREDIT RULE 4. Increases to asset accounts are recorded as debits. Debit Change Fund for $100.
5.Decreases to asset accounts are recorded as credits. Credit Cash in Bank for $100.
Establishing a Change Fund (cont'd.)Establishing a Change Fund (cont'd.)
Section 1 The Change Fund (cont'd.)Section 1 The Change Fund (cont'd.)
Business Transaction (cont'd.)
On May 1, the accountant for On Your Mark wrote Check 2150 for $100 to establish a change fund.
T ACCOUNTS 6. Change Cash inFund Bank
Debit
+
100
Debit
+
Credit
–
Credit
–
100
Establishing a Change Fund (cont'd.)Establishing a Change Fund (cont'd.)
Section 1 The Change Fund (cont'd.)Section 1 The Change Fund (cont'd.)
Business Transaction (cont'd.)
On May 1, the accountant for On Your Mark wrote Check 2150 for $100 to establish a change fund.
JOURNAL ENTRY 7.
Using the Change FundUsing the Change Fund
Change fund is put into the cash register drawer at the beginning of the day.
A cash proof is prepared to verify that the amount of cash in the drawer equals the total cash sales for the day plus the change fund.
The amount of cash in the change fund is set aside for use as change for the next day.
Change fund is put into the cash register drawer at the beginning of the day.
A cash proof is prepared to verify that the amount of cash in the drawer equals the total cash sales for the day plus the change fund.
The amount of cash in the change fund is set aside for use as change for the next day.
Section 1 The Change Fund (cont'd.)Section 1 The Change Fund (cont'd.)
Recording Cash Short and OverRecording Cash Short and Over The amount of cash either gained or
lost because of errors is recorded in the Cash Short & Over account.
Cash Short & Over is a temporary account.
The Cash Short & Over account does not have a normal balance.
The amount of cash either gained or lost because of errors is recorded in the Cash Short & Over account.
Cash Short & Over is a temporary account.
The Cash Short & Over account does not have a normal balance.
Section 1 The Change Fund (cont'd.)Section 1 The Change Fund (cont'd.)
Cash Short & OverDebitCash
Shortages
CreditCash
Overages
Check Your UnderstandingCheck Your Understanding
Suppose a salesclerk makes an
error and gives an incorrect amount
of change to a customer. Explain
how this error is recorded in the
accounting records.
Suppose a salesclerk makes an
error and gives an incorrect amount
of change to a customer. Explain
how this error is recorded in the
accounting records.
Section 1 The Change Fund (cont'd.)Section 1 The Change Fund (cont'd.)
