Chapter 9.1 Accounting for Cash Receipts Payment Systems – provides a method for people to exchange one value for another. Methods of payment have evolved and include cash, ______, credit cards, __________and _______ or ___________transfers.

Methods of Payment Pros Cons Cash Cheques Pros Cons

Methods of Payment Pros Cons Credit Cards Debit Cards Pros Cons

Methods of Payment Direct or Electronic Transfers – money transferred from one account to another, electronically. Examples include paycheques, mortgage payments, bill payments etc. Pros Cons

Accounting for Cash Receipts Recall Cash Receipts – funds taken in from business operations and include all items considered to be money. These funds must be carefully controlled and safeguarded. Types of cash receipts include: ____________________– cash receipts summary is prepared to keep track of cheques __________________– Sales slips = cash in _________________– POS terminal tracks all credit card & debit card sales for each day.

Preparing Cash Proofs A business must have a system to __________ ________ of cash received during the day. To prove that the cash amount is accurate, someone must compare the total of the cash counted with the total shown by the cash register. (Subtract the amount of money that they started out with in the cash register – float). A ___________is an accounting procedure that ________________(source documents) ____________(physical count of cash).

Accounting Transaction If the cash receipts balance to the actual cash the journal entry for cash receipts would look like this: Dr. Bank 2645 Cr. Sales 2300 Cr. HST Payable 345 **We have done this before…remember!!!

Cash Short or Over _____________when they deal with cash. If this happens we just record the journal entry for cash receipts an amount of cash short or over like this: Dr. Bank 2625 Dr. _________________20 Cr. Sales 2300 Cr. HST 345 The actual amount of cash to put in the bank is only $2625 but we must still make the debits and credits equal therefore we must _______________in the ___________________.

Cash Short or Over At any particular time the balance in the cash short or over account represents either a __________(______________) or an __________(_____________). The account is placed in the expense section of the chart of accounts because it is ________ _______________ (shortage of cash).

Preparing the Business Deposit Take out a blank deposit slip Sort money by denomination Coins are rolled All cheques are endorsed by the depositor stating “_____________” (security feature) Deposit slip is completed and must agree with the ___________________________ _________________. A duplicate deposit slip is stamped by the bank and kept on record by the business.

Critical Thinking Questions As a business what form of payment would you prefer? Cash, cheque, credit card or debit card? As a customer, what form of payment would you prefer to use? Why? Why would the cash short/over account normally have a debit balance (be short)?