The general box is a subledger in which all cash receipt and payment transactions are stored, including bank deposits and withdrawals. It is the main store of information related to cash of a company.
Companies divide general cash into two segments: the cash disbursement journal, where all cash payments are recorded, such as operating expenses and accounts payable, and the cash receipts journal, where all cash receipts are recorded. , such as cash sales and accounts receivable.
A business uses the general box to keep track of the various cash receipts and payments that travel through a business.
The information in the general cash register is periodically recorded in the general ledger. Routinely compared to bank records through a bank reconciliation, to ensure that the information in the book is correct.
If it is not correct, an adjustment entry is made to bring the general box into compliance with the bank information.
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The economic activities of any business involve a regular inflow and outflow of cash and cash equivalents. The general fund helps the leadership of a company to determine how much money the business has at any given time.
With this information, the company can show its cash flow statement to lenders and thus ensure that it is effectively meeting the competitive challenge..
Cash flow is focused on the money the company spends on investment, operation and financing activities.
In companies that handle a large number of cash debit and credit transactions, the general cash replaces a separate cash account on the company ledger..
Businesses with fewer cash payments and receipts may not require a general box and choose to use only one cash account.
The general box is used to record receipts and cash payments. Works as a helper book.
Entries related to cash receipt and payment are first posted to the general cash register and then posted to the corresponding general ledger accounts.
Also, the general cash is a substitute for the cash account in the ledger. If a general box is properly maintained, there is no need to open a cash account in the ledger..
There are many reasons why a company can record transactions using a general till instead of a cash account..
- Daily cash balances are easy to access.
- Errors can be easily detected through verification.
- The entries are kept updated, because the balance is checked daily.
In the business context, safe cash policies are adopted, especially those related to checking the general cash, to encourage accurate reporting and prevent asset theft.
You should never put the money received in the petty cash. Will cause errors and confusion in accounting records.
All money coming into the business must be promptly deposited into the bank and entered into the records before it is paid again. Otherwise it can be confusing when reconciling cash balance.
Proper receipt issuance helps protect the business from someone pocketing the cash instead of depositing it. Receipts must be pre-numbered with duplicate.
Sometimes it may not be possible to get receipts. For example, when buying items in a market.
In this case, the cost of each transaction should be noted immediately so as not to forget the amounts. They can then be transferred to a cash receipt for a manager to authorize.
Having money in the office is tempting. Many times a fraud starts this way.
Cash must be deposited quickly in the bank. At most, within three days of receipt.
To protect people who handle money, there should always be two people present when opening cash boxes, envelopes, and other sources of money. Both people must count the cash and also sign the receipt.
The box should only be used to make payments when the other methods are impossible. Ideally, set up vendor accounts to pay invoices by check or bank transfers.
The advantage of paying by checks is that an additional set of records is produced in the form of a bank statement. In addition, it ensures that only authorized persons make payments, reducing the possibility of theft or fraud..
The general cash register is generally subdivided into a cash receipt journal and a cash disbursement journal when there are large numbers of transactions.
In a small company, with less transactional volume related to cash, all cash transactions are recorded in a single general box.
Cash transactions go through different phases before ending in a liquidity report. In general, money inflows and outflows are recorded by debiting and crediting the cash account..
For example, customer collections are accounted for by debiting the cash account and crediting the customer's accounts receivable account. The information in the general box is entered in chronological order, in order to facilitate the search for transactions.
The cash inflows are then entered into the trial balance, which helps accountants verify that total credits equals total debits..
The third step in the financial reporting process leads to disclosure of cash on the corporate balance sheet..
The first general cash entry is the opening balance at the beginning of an accounting period. Each entry must contain a date, a note about the expense or receipt, and the total amount of the transaction.
General cash transactions must also be transferred to the corresponding accounts or titles within the general ledger..
For example, payments received in cash for services rendered are listed in the "Assets" section of the general ledger..
Out-of-pocket expenses for supplies and other business materials are listed as expenses.
A company must reconcile the general cash register with the monthly bank statements received from the financial institution, and take into account discrepancies in funds..
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