Note that the treatment for recording receipts from credit customers differs to that of recording receipts from cash customers. Vouching of receipt side or debit side of cash book. The discount allowed to customers should be properly authorized by a responsible officer. In case large number of cash sales are affected, check cash sales summary book maintained by client. Vouching of receipt side or debit side of cash book 1. It is through vouching that an auditor can satisfy himself as to the authenticity and completeness of transactions in the books of accounts. If they are correct, auditor assumes that others are correct. Vouching is carried on for the receipts or the debit side of the cash book from finance 0021 at case western reserve university.
Vouching of debit side of cash book or cash receipts cash book is one of the most important books of accounts. How the auditors vouch the cash book including the receipt. Dec 17, 2019 the single column cash book uses one column on each side of the cash book to record either the receipt of cash on the left hand side debit, or the payment of cash on the right hand side credit. Vouching of the payment side of cashbook cheque payments.
The technique of vouching in respect of the important items which usually appear on the debit side of the cash book is discussed here. Vouching of receipt side or debit side of cash book vouchers to. The chances of misappropriation of cash are very high that is why auditor has to see that no receipt or payment of cash is unrecorded in cash book. Have been properly recorded in the books of accounts.
If, original entry is wrong, it will affect every process of accounting entry and its impact will be till the end result. Vouching of receipt side or debit side of cash book the receipt side or the debit side of the cash book contains items such as opening balance, cash sales, receipts from debtors, receipts from bills discounted and bills matured, income from investments, sale of investments, sale of fixed assets, loan received, and miscellaneous receipts, etc. Errors and frauds usually arise in connection with cash receipts. The techniques of vouching in respect of the important items which usually appear on the debit side of the cash book. The carbon copy receipts or counterfoil receipts in support of the entries appearing in the receipt side of the cash book should be examined. Vouching of cash transactions vouching of cash receipts debit side of cash book we will discuss the cash receipt which are placed on the debit side of cash book for following items. Each and every cash entry has to be traced back to its origin and must be verified with the help of appropriate receipt or document. Reference should be made to the audit working papers to see if the closing balance of the cash shown in the balance sheet is the result of many balances. Vouching is carried on for the receipts or the debit side. Procedure in regard to vouching the debit side of cash book it is difficult to vouch the receipt of cash because some entries might have been omit altogether. The first item to be checked on the receipt side of the cash book is opening balance. What is cash book definition, explanation and format.
Bcom 3 rd year auditing vouching study material notes in hindi. Cashbook cash payment transactions credit side or payment side of the cash book auditor should satisfy himself that the payment have been actually made. Dec 09, 2017 vouching of cash transactions cash book is the most important of the books of ac for any business. A cashbook refers to an accounting book which records all the cash receipts and the cash disbursements. Cash book definition, types accounting format of cash book. Vouching of cash receipts debit side of cash book opening balance of cash book cash received from debtors repayment of loan by others rent. Vouching of debit side of cash book or cash receipts 1. Opening balance of cash book represents cash in hand at the start of the year and should verified from. The objects of vouching the payment side of the cash book are to ensure that the payments were properly authorized ascertain that they were entered under their appropriate head of account in the cash book see that payments relate to the business and are a proper business charge, determine that the payments stated to have been made are supported by the required documentary evidence and determine the. Vouching of cash receipts debit side of cash book we will discuss the cash receipt which are placed on the debit side of cash book for following items. Examine authorization level for making cash sales and receiving amount therefrom. Similarly, vouching is base of all auditing process.
Vouching of cash receipt transactions is more difficult than that of cash payment transactions, since there is greater chance of manipulation in regard to cash receipt. Cash received from customer not recorded in books and no cash receipt may. Vouching of credit side of cash book or cash payments. The balance of a cash book is posted to the cash account in the ledger. Vouching of cash receipts general guidelines to auditors. Receipts are recorded on the debit the left hand side, and payments are recorded on the credit right hand side. The auditor has to ensure that all receipts have been accounted for. Receipt and payment account definition, explanation. Basically vouching of cash receipts are done on the debit side of the cash book and it is stated that opening balance of the cash book indicates cash in hand at the start of the year and compared from the financial report of the last year taking this balance as closing stock. The transactions supposed to be recorded only if relevant evidences are available. Unit4 vouching of cash transactions vouching of cash receipts. A cash book is a type of subsidiary book where cash or bank receipts and cash or bank payments made during a period are recorded in a chronological order. A test check the extent of which will depend on the efficiency or otherwise of the system of internal control with the goods outwards book should also be carried out. Verify the cash in hand by actually counting it and see whether it agrees with cash book balance.
How the auditors vouch the cash book including the receipt side. Oct 05, 2017 vouching of cash book cash book is a very important financial book for a business concern. Efficiency of vouching will decide the success of audit. Vouching is equally important as passing of original entry in the books of accounts. It should be checked with the balance shown in the audited balance sheet of the previous year. By vouching for someone, be it a school presidency election or a nationwide presidential election you are stating what side you are on and supporting them. The auditor should bear in mind the following points, while vouching the cash receipt transactions. First of all, the opening balance on the debit side of the cash book should be compared with the. All the receipt of cash should be recorded in the cash book. Opening balance of the current year refers to the closing balance of last year. Vouchers can be sales invoice, purchase invoice, bank statements, minutes book, cash memo, bills, bank paying slip, purchase requisition slip, receipt, salaries and wage sheet, gate keepers note, bank passbook, memorandum and articles of association, delivery challans, stores, records, counterfoil of cheque book, etc. Test check the few bills for ascertaining accuracy of rate, amount, discount and sales taxvat etc.
Cash received should be entered on the same date when the cash is actually received. The receipt side or the debit side of the cash book contains items such as opening balance, cash sales, receipts from debtors, receipts from bills. Meaning of vouching significance of vouching routine checking and couching objective of vouching of cash book vouching of receipt side of cash book vouching of payment to creditors vouching of salary, travelling expenses vouching of purchases returns book vouching. Reference should be made to the audit working papers to see if the closing balance of the cash shown in the balance sheet. The vouching of a cash book is a very difficult process. How to post the cash receipts book accountancy learning. For example, at a football match, you would vouch for your team because you want them to win. The auditor should examine the method adopted for depositing daily cash receipts in the bank. Vouching of receipt side or debit side of cashbook or cash receipt transactions. Which points should be considered while vouching of cash. The documentary pieces of evidence such as counterfoil, cash memo, receipts and payinslips used for recording transactions in books of accounts is defined as a voucher. In vouching payments, the auditor does not merely seek. The cash balance on any day can be known from cash book. Vouching in general is a term used for agreeing and siding with someone over a matter.
In vouching payments, the auditor does not merely seek proof. Opening balance of cash book opening balance of cash book represents cash in hand at the start of the year and should verified from the balance sheet of last financial year. All unused receipt books and cheque books should be kept under lock. Usually, cash receipts are entered first in the unpleasant cash book before they are entered in the cash book. Correspondence with customer and ledger account should. Auditing vouching of cash transactions tutorialspoint.
Cash sales there are greater chances of fraud under this head and so much care should be taken. Opening balance opening cash bl recorded on receipt side of cash book the auditor check last year audited account and verify that last year closing bl is correctly carry forward to current year. Vouching of cash receipts debit side of cash book the process. The receipt side or the debit side of the cash book contains items such as opening balance, cash sales, receipts from debtors, receipts from bills discounted and. It should be checking with the balance shown in the audited balance sheet of the previous year. The carbon copies or counterfoils of cash receipt book should be verified. In the case o receipt side of the cash book it is possible that a less amount might have been entered on the counter foil than the money actually received. In our example, we have 3 credit customers and 2 cash customers we know this because there are 3 entries in the trade receivables slcadebtors column and 2 other receipts that are not shown in this column. Amount of cash received should be deposited into the bank daily. The auditor in vouching cash payments or credit side of cash book should ensure that payments are made for the purpose of business, payment relates to the period under audit, payment is properly sanctioned and recorded, payment has been made to the right person, and payment is properly supported by a voucher and same as entered in cash book. For simplicity, the single cash ledger book diagram below shows only one side of the cashbook, in this case the left hand, receipts side debit. Sales vouching examine the internal control over receipts from sales. Examine the method adopted for depositing daily cash receipts in bank.
Vouching could be applied in physics in that certain forces are vouched for by the earths conditions, for example, gravity is the strength that it is because of the earth turning at a. If there is any restriction to signing authority to sign the amount to a. Vouching of debit side of cash book or cash receipts auditing. Vouching of receipts of the debit side of the cash book it is rather very difficult to vouch the receipt of cash than to vouch payments as some entries might have been omitted altogether and therefore only an indirect evidence like counterfoils of receipts issued, carbon copies of receipts, contracts and letter from debtors etc. Opening balance of cash book represents cash in hand at the start of the year and should verified from the balance sheet of last financial year. Sep 19, 2014 vouching of cash transactions cash book is the most important of the books of ac for any business. Bcom auditing vouching study material notes in hindi. Vouching of debit side of cash book or cash receipts. All payments except petty cash expenses should be made by cheque. I could not find a term in physics science for vouching.
This is possible when they are not kept in safe custody. Entryinthe books of accounts examine the method of depositing cash receipts daily. The receipts and payments are recorded in cash book. Before starting the vouching of cash book, the auditor should inquire about the internal check system in operation. The entries for receipts and payments of cash are checked with reference to various supporting documentary evidences. It is a term used for encouraging someone or voting for them. The pay in slip should invariably be used for this purpose. The singlecolumn cash book shows only receipts and payments. He can verify the cash receipt in the cash book with the counter foil or carbon copy of the receipt issued to the party. A receipt and payment account is a summarized cash book cash and bank for a given period or this is simply a summary of the cash transactions as in the cash book, analyzed and classified under suitable headings, including the opening and closing balances.
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