3 Controlling Cash

3.1 Internal Control

Protection of assets
Compliance with company policies
Evaluation of performance
Accuracy of accounting reports
3.2 Controlling cash
Controlling cash receipts
Controlling cash disbursements
Bank reconciliation
Bank reconciliation statement
Petty cash fund
Establishing the fund
Operating the fund
Replenishing the fund
Cash short and over
The voucher system
Procedures for preparing the voucher
Special journals used
Procedures for paying a voucher
Files maintained in the voucher system

Cash control is a process that is used to verify the complete nature and accurate recording of all
cash that is received, as well as any cash disbursements that take place. As a broad principle of
responsible financial accounting, this process takes place in any environment where goods and
services are bought and sold. As such, businesses, non-profit organizations and households all
employ its basic tenets.
To fully understand cash control, it is helpful to understand what is meant by cash, when it comes to
financial accounting. Along with referring to currency and coin, this term is also understood to include
forms of financial exchange like money orders, credit card receipts, and checks. Essentially, any type
of financial exchange that can be immediately negotiated for a fixed value qualifies.
Cash control means competently managing all these types of financial instruments by maintaining an
accurate tracking system that accounts for both receiving and disbursing the cash. Designing this
process is typically not difficult, and there are a few basic elements that will be incorporated into the
process, regardless of whether the procedure is used in the home or in an office or business
environment.
First, all transactions related to cash must be documented and recorded immediately. Theaccrual
method of accounting, in which earnings and expences are recorded when they are incurred, rather
than when they are received or paid, is not used. Each cash receipt is recorded upon reception,
while each disbursement is entered at the time that the payment is released. This mode of
documentation requires only some basic templates that will record the necessary data. For the

home, a checking account can be used to track all cash deposited into a common account for the
good of the home, and the check book register can serve as the basic document that keeps track of
the inbound and outbound transactions.
Next, solid procedures require that there be multiple, but limited, individuals who have access to the
cash, which serves two purposes. First, people can be held accountable for the way that the cash is
managed. Second, having at least two people oversee the process helps to ensure that important
transactions can take place at any time, even if one individual is unavailable for some reason.
Cash control also demands that the documents related to the task are kept separated from the
physical location of the cash. In other words, the accounting book that is used to record the cash
transactions should not be kept in the safe with the currency, money orders, and checks. This simple
precaution helps to ensure that the task of altering the physical evidence related to cash in hand is
more difficult, and therefore minimizes the chances for theft to occur.

Control Audit on wiseGEEK:

Material collected during a quality control audit can be pulled together into a report.
Although not all manufacturers utilize all three types of quality control testing, nearly all
manufacturers implement some form of quality control auditing in the manufacturing process. Inhouse quality control tests might be something as simple as visual inspection of the product for the
correct number of pieces, correct coloration or visible damage, or this type of testing might involve a
complex series of carefully calibrated laboratory tests to determine chemical compositions and other
properties of a manufactured product.
Cash Control Procedures on wiseGEEK:
To fully understand cash control, it is helpful to understand what is meant by cash, when it
comes to financial accounting.
After the funds are properly recorded, the cash management policy will usually address
theprocedures for allocating funds for specific purposes.
ash Reconciliation on wiseGEEK:
The basic idea behind cash reconciliation is to account for all cash resources and make
sure there is no question regarding monies received or spent during the period under consideration.
Where bank reconciliations review the individual transactions contained in a
companys cashaccount, the cash flow statement is a more overarching approach
to cash reconciliation.
Internal Cash Control on wiseGEEK:
In addition to these tips, avoiding company credit cards is also wise, as this helps to reduce
financial stress, which enables increased success at cash control. Conducting monthly bank
reconciliations is an important cash control tip to follow because it allows a business to verify that
its cash is not being abused, misused, or lost.

Also known as CFROI, a cash flow return on investment is a type of valuation model that
operates with the understanding that the price of the investment is not determined based on the
performance of the entity that issued the security, but on the current status of cash flow. The idea is
that this return must exceed the internal hurdle rate of the corporation in order for the price of the
security to be both attractive to investors and lucrative for the issuer.
Cash Control System on wiseGEEK:
In addition to these tips, avoiding company credit cards is also wise, as this helps to reduce
financial stress, which enables increased success at cash control. Conducting monthly bank
reconciliations is an important cash control tip to follow because it allows a business to verify that
its cash is not being abused, misused, or lost.
To fully understand cash control, it is helpful to understand what is meant by cash, when it
comes to financial accounting.
Cash Control on wiseGEEK:
In addition to these tips, avoiding company credit cards is also wise, as this helps to reduce
financial stress, which enables increased success at cash control. Conducting monthly bank
reconciliations is an important cash control tip to follow because it allows a business to verify that
its cash is not being abused, misused, or lost.
To fully understand cash control, it is helpful to understand what is meant by cash, when it
comes to financial accounting.
Accounting Procedures on wiseGEEK:
For example, the use of generally accepted accounting principles (GAAP) has been
instituted in the United States by the accounting profession to ensure a commonality among
companies. Generally, accounting procedures cover such topics as how to record financial data,
summarize financial data, prepare financial statements, and routine accounting matters.
Similar to regular accounting procedures, general ledgers in escrow accounting may use
sub-ledgers or journals to record financial transactions.