Generally, the small business comprises:
- Cash on Hand
- Cash in Bank
Generally, the cash on hand amounts are not material, while significant amount of the businesses’ cash are kept in bank. What will be the accounting entries for cash receipt and cash disbursement (i.e. payment).
Upon receiving of cash from debtors:
Dr. Cash in Bank
Cr. Trade Debtors
Upon disbursement of cash (i.e. outflow of cash) for expenses
Dr. Trade Creditors/ Expenses
Cr. Cash in Bank
For bank charges on the bank account deducted from bank account directly:
Dr. Bank charges
Cr. Cash in Bank
It’s important to note that: a online bank account enable the small business to track the transaction on a real time basis. Conventionally, small business is required to check the cash inflow and outflow while they have received the monthly bank statement from the bank. With online banking account, the small business is allowed to view the transactions on a timely basis.
Tuesday, March 3, 2009
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