Page 223 - F1 - AB Integrated Workbook STUDENT 2018-19

Financial systems and procedures

The cash system

5.1 Stages in the cash system

When we refer to the cash system, we are sometimes referring to the banking
system, and payments into and from the bank account. We also need to consider
the petty cash system.

Cash system

Receipts Payments Petty cash
system system system

The receipts system

 Cheques are received from credit customers. These are recorded in the cash
book and in the customer’s personal account. The cashier then pays the
cheques into the business bank account.

 Controls must be in place to ensure the cheque cannot be misappropriated
before it is paid into the bank.

 Some customers may pay money directly into the business bank account. The
cashier should go through the bank statement carefully, enter details into the
cash book, and ensure details are passed to the sales ledger section to deduct
the amount from the customer’s balance.

The payments system

 Companies pay their suppliers.

 A cheque requisition is prepared for each payment. This form details why a
cheque is required. A cheque will be prepared and the invoices paid will be
submitted to a senior manager for approval and to have the cheque signed.

 If the company pays its suppliers through direct bank transfer, each transfer
should be approved by a senior manager before it is set up.

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