A cash receipt is a printed document of the amount of cash received during a sales transaction. Usually, a copy is made which is kept by the seller and the original receipt is given to the customer.
The Sustainability of a business is measured by the management of the company’s costs and sales and cash receipts help to monitor them accurately. Cash receipts represent the sales and payments made by the customers. The company selling the products may receive cash in any form, including credit cards, checks, wire transfers, money orders, etc. An accountant of the company documents all the cash receipts in a cash receipt journal. This journal keeps track of all the cash coming into the business. An accountant credits the sales accounts and debits the cash accounts. For entering the data into the journal, the cash receipts are usually divided into 3 categories:
- Received from Cash sales
- Received from Credit customers
- Received from Other sources
The daily cash balance sheet can be used to track all cash received and paid out. Cash receipts are recorded and deposited on the same day. Any shortage or overage of cash is carefully investigated and corrected.
Types of Cash Receipts
The type of cash receipts usually depends on the nature of the business. Generally, they can be divided into three types:
Online Payment Cash Receipts: They are electronically generated receipts. iPayment is a payment service provider for online merchants. It is a web-based application that allows deposits to be submitted electronically. They do not require customer information.
Cash registered Cash Receipts: A printed voucher of the purchase is generated from the cash register. They can be connected to networks or they can be stand-alone.
Manual Cash Receipt: A manual cash receipt is prepared by-hand and requires a lot of care. Usually, these are triplicated with a white, pink, and blue copy. The white copy is for customers, the pink copy is for FMO (financial Management Operations) and the blue copy is kept in the receipt book by the department, for record keeping.
Uses of Cash Receipts
Cash receipts are very essential and can be useful in many ways:
- They are Important for accounting records of sales
- They provide a proof of ownership
- They can be used for return or exchange of items bought
- Warranty can be claimed by showing the cash receipts
- Audit issues can be avoided by keeping the record of cash receipts
- Cash receipts help you to properly manage your taxation. These can be retained if there is any claim to be made for a tax deduction
- They place constraints on overspending of the company’s capital, hence improve profitability
- Cash receipts provide accurate reporting on the use of the company’s cash
Who uses Cash Receipts?
Cash receipts are primarily used by all types of businesses. Within the company, accountants use them to keep and maintain the company’s sales records. The information on cash collection and payments are used to create company budgets. Some companies use this procedure to create income statements and other future reference reports. From a company’s point of view, when a sales transaction happens, it is a collection of money that shows an increase in a company’s balance sheet.
Cash Receipt Function
The cash receiving function of an organization is centralized. When a branch office receives a cash receipt, the branch officers make the cash deposits and then it is transferred to the central office through the banking system. As soon as a cash receipt is received, the following steps take place:
Receive payment from customers
- Receive payment from customers
- Identify the invoice with which each receipt is linked
- Deposit payments to a bank account
- Balance deposit against actual bank activity
- Post receipts
- Monitor and settle cash receipts
When a collection of cash is made over the counter or in the field, a sequenced pre-numbered receipt is issued through cash registered or automated systems. The mode of payment is also mentioned on the receipt, such as cash, bank draft, check, etc. Once the cash receipts log is with the accounting department, it should be kept with the deposit, as a source document.
Templates
A cash receipt consists of the following information:
- Vendor Details
- Date of the Transaction
- A unique Identification number assigned to the document
- Customer Name
- The cash Amount received
- Method of payment
- Vendor Signature
License: ENERGY (Personal use only)
(Distribution) by Kate Elizabeth(CEO)
License: ENERGY (Personal use only)
(Distribution) by Kate Elizabeth(CEO)