Professional Documents
Culture Documents
Acctg211n CCE
Acctg211n CCE
- not necessary to adjust and open in ledger - the checks are drawn, recorded, & given to the payees
but they bear a date subsequent to the BS date
- not permitted in the Philippines
- Original Entry: Dr. Cash, Cr. Accounts payable or
EXCEPTION TO THE RULE ON OVERDRAFT appropriate account
“Cash, net of bank overdraft” – when the company - no payment: until checks can be presented to bank for
maintains 2 or more accounts in 1 bank, and 1 account encashment or deposit
results in an overdraft – such overdraft may be offset
against the other bank account with a debit balance STALE CHECKS or CHECKS LONG OUTSTANDING
- an overdraft may also be offset against other bank - when checks are not encashed by payees within a
account if the amount is not material relatively long period of time = “stale”
- when checks have been merely drawn & recorded but - books left open beyond reporting period to show a
not given to the payees better picture of financial highlights & profit activities:
- no payment: when the checks are pending delivery to a) By recording as of the last of the accounting period
the payees on balance sheet date collections made subsequent to the close of the
period.
b) By recording as of the last day of the accounting ACCOUNTING FOR CASH OVERAGE
period payments of accounts made subsequent to the
close of the period. - “Cash Overage” – when cash count shows MORE than
the balance per book
- above practices are unacceptable & undesirable. Entries
must be reversed to correct the statements. Entry: Dr. Cash, Cr. Cash short or over
- misappropriating a collection from one customer & - if properly found to be the money of cashier:
concealing this defalcation by applying subsequent Entry: Dr. Cash short or over, Cr. Payable to cashier
collection made from another customer
IMPREST SYSTEM
- involves a series of postponement of entries for
collection of receivables - a system of control of cash which requires that all cash
receipts should be deposited intact & all cash
KITING disbursements should be made by means of check
- used to conceal a cash shortage too > 2 methods of handling Petty Cash:
- possible when a company maintains current accounts in 1. Imprest Fund System
different banks, usually employed at the end of the
month - one usually followed in handling petty cash transactions
- when a check is drawn against the 1st bank & depositing > Petty cash fund value: consistent
the same check in a 2nd bank to cover the shortage in the
2. Fluctuating Fund System
latter bank
- checks drawn to replenish the fund do not necessarily
- can be discovered by simultaneous preparation of bank
equal the petty cash disbursements which are
reconciliation statements
immediately recorded
ACCOUNTING FOR CASH SHORTAGE
> Petty cash fund value: changing/fluctuating
“Cash shortage” – where the cash count shows cash LESS
*Replenishment Checks – drawn upon the petty cashier’s
than the balance per book
request
Entry: Dr. Cash short or over, Cr. Cash