ACTBAS2

Cash
Imprest System
The imprest system is a system of control cash which requires that all cash
receipts should be deposited intact and all cash disbursements
should be made by means of check.
PETTY CASH FUND
Is money set aside to pay small expenses which cannot be paid conveniently
by means of check.
Take note that the one responsible and accountable for the petty cash fund is
the petty cash custodian.
Methods of handling petty cash fund:
1. Imprest fund system
2. Fluctuating fund system
BANK RECONCILIATION STATEMENT
Bank reconciliation is a statement which brings into agreement the cash
balance per book and cash balance per bank.
Bank Statement
Monthly report of the bank to the depositor showing the cash balance per
bank at the beginning, the deposits acknowledged, the checks paid, other
charges and credits and the daily cash balance per bank during the month.
The bank statement is an exact copy of the depositors ledger in the records
of the bank.
RECONCILING ITEMS
1. Book reconciling items:
a. Credit memos
b. Debit memos
c. Errors
2. Bank reconciling items:
a. Deposits in transit
b. Outstanding checks
c. Errors
Credit memos
Credit memos refer to items not representing deposits credited by the bank
to the account of the depositor but not yet recorded by the depositor as cash
receipts.
Examples of credit memos
a. Notes receivable collected by bank in favor of the depositor and credited to
the account of the depositor.
b. Proceeds of bank loan credited to the account of the depositor.

c. Matured time deposits transferred by the bank to the current account of the
depositor
Debit memos
Debit memos refer to items representing checks paid by bank which are
charged or debited by the bank to the account of the depositor but not yet
recorded by the depositor as cash disbursements.
Examples of debit memos
a. NSF of no sufficient fund checks (received) These are checks deposited but
returned by the bank because of insufficiency of fund.
b. Technically defective checks These are checks deposited but returned by
the bank because of technical defects such as absence of signature or
countersignature, erasures not countersigned, mutilated checks, conflict
between amount in words and amount in figures.
c. Bank service charges These include bank charges for interest, collection,
checkbook and penalty.
d. Reduction of loan This pertains to amount deducted from the current
account of the depositor in payment for loan which the depositor owes to the
bank and which has already matured.
Deposits in transit
Collections already forwarded to the bank for deposit but too late to appear in
the bank statement
Undeposited collections
Collections which are still in the hands of the depositor. It has the same
effect of deposits in transit, which is to be added to the unadjusted balance
per bank.
Outstanding checks
These are checks already recorded by the depositor as cash disbursements
but not yet reflected on the bank statement.
FORMS OF BANK RECONCILIATION STATEMENT
a. Adjusted balance method the book balance and the bank balance are
brought to a correct cash balance that must appear on the balance sheet.
b. Book to bank method the book balance is reconciled with the bank balance
or the book balance is adjusted to equal the bank balance.
c. Bank to book method the bank balance is reconciled with the book balance
or the bank balance is adjusted to equal the book balance.