CONCEPT OF CASH TRANSACTIONS
All financial transactions are ultimately settled in cash Some transactions are settled Imminently after purchase and sale and the rest are altered lew days In fact. business transactions are settled sooner or later either in cash or through the bank. Usually, sell sums are settled in cash, and Lie mums are settled through bank There is a greater chance of misappropriating each performing cash and banking transaction Cash can be misappropriated by showing no record or less record of cash receipts Similarly, it can be misappropriated by showing more or lice record of payments Hence, in order to have proper Information and control over cash and banking transactions, every business maintains a separate cash book
MEANING OF CASH TRANSACTIONS
Cash transactions refer to cash receipts and payments. The receipts of cash from various sources and payments of cash on various heads are important routine transactions of a business. The main OPos of cash receipts is the sale of goods and services, sale of old assets, the contribution of capital loan borrowed, Interest, rent, commission, and other receipts from customers. The main heads of payments are the purchase of goods, wages, rent stationery, Interest on loan borrowed down repayment of liabilities, advertising, and payment to suppliers
Banking transaction refers to all receipts and payments made through bank It is an inconvenient and risky affair to get and make payment of large sum directly in cash A modem business operates bank account to settle all receipts and payments. It issues a cheque for making payment and accepts a cheque for getting the amount. It may also instruct its bank to pay and collect the amount on its behalf. In act, the bank is treated by the business as its agent for collecting all receipts and making all payments. Except for the balance in the petty cash account, no cash balance is maintained in the office of a modern business.
OBJECTIVES AND IMPORTANCE OF CASH TRANSACTIONS
1. A business must have strict financial rules and an accounting system to perform, record, report, and control the cash and banking transactions.
2. Proper recording and accounting of cash and banking transactions are important to achieve the following objectives
3. To have a systematic and permanent record of all cash and banking transactions in a separate book
4. To obtain reliable and detailed information of all cash receipts and payments easily an immediately
5. To keep an effective control over misappropriation of cash and banking transactions To know the main sources and heads of payment of cash.