by Mike
(Chennai )
I'm recording my cash/cheque transactions as follows (I'm not using Quick Books):
1. I'm maintaining a cash account which I'm using for currency & coin receipts from customers.
When I receive currency, I make the entry as follows:
Cash (Dr)
Accounts receivable (Cr)
When I bank the currency, I make the entry as follows:
Bank (Dr)
Cash (Cr)
2. For cheque receipts, I make the entry as follows, whether it is deposited on same day or on a later day. (entry recorded on receipt date)
Bank (Dr)
Accounts receivable (Cr)
My question - As I'm recording only currency collection in the cash account & cheque collections directly to the bank account, could you please tell me whether the above method complies with correct accounting procedures. Is it correct or not?
Normally in the cash book we have to record even cheque collection in cash column if it is not deposited on same day. Later we record with a contra entry when the cheques are deposited.
I would like to reduce the number of entries so is it okay to follow my method above?
Comments for Deposits to Bank Accounts
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