LEARNING UNIT 6_FINANCIAL RECORDS.ppxxxx

The book it's about business

1. FINANCIAL RECORDS

2. Introduction Keeping financial records is the most important of all record keeping. Record keeping is a form of internal control. Future reference. To manage matters in an orderly way. Reasons for recording financial matters in an organisation: To record all income received and the payment of authorised expenses. To keep records of all the assets and debts to debtors. To record all liabilities and outstanding debts to creditors.

3. The remittance register Management assistant may receive money by mail. Records of these payment must be kept. A register in which all kinds of money received are recorded. DATE REC. FROM FORM OF MONEY FOR AMOUNT SIGNATURE REC. NO. REMARKS Jan 18 A Nel Cheque Interest R77.00 123 MZ Sales Cash Parking R10.00 124 Seminar 20 T Koo P/order Account R36.00 144 Acc. No. K22

4. Analysis of notes and coins Some organisation pay their workers in cash The wage clerk needs to make an analysis of the amount of each denomination required to make up each person’s wage Example of analysis of notes and coins Name R100 R50 R20 R10 R5 R2 R1 50c 20c 10c 5c 2c 1c Kay 3 1 1 2 1 1 Ngomo 4 2 1 1 1 1 2 1 1 Total 7 1 2 2 3 1 1 2 1 2 1

5. Petty Cash Management

6. The petty cash system The float or imprest amount The management assistant will receive a cheque from the cashier. The cheque is cashed and kept safe by the management assistant. Making payments The system works as follows: The person will complete a petty cash voucher stating the reason for the payment. A senior will have to approve the transaction by signing the voucher The recipient will sign the voucher as proof that she/he received the money. The invoice or some document as proof that payment was made is attached to the voucher. The vouchers are numbered in sequence. The voucher are filed as the source document.

7. Restoring the imprest of float Petty cash cashier receives an amount of money at the beginning of a month End of the month the amount is replenished “restoring the imprest amount”. Control measures Guidelines: No staff member is allowed to lend money from the petty cash. A senior should regularly control the petty cash. The vouchers should be audited to ensure that the expenses are authorised and validated. Inspections should be carried out.

8. DEPOSITING MONEY Policy for receiving and depositing money Policy guidelines: The cashier must issue a receipt for all money received. All money received must be deposited daily into the bank. All payments are done by cheque, except for the incidental expenses that are paid through the petty cash. No money received may be used for payments. All cheques or postal orders must be crossed. For safety and control purposes a deposit book should be obtained from the bank.

9. Procedures for depositing money into the bank All receipts in the receipt book from the last deposit must be added. A note must be made on the last duplicate receipt with the following info: The total amount of the deposit The date A reference number The total of the receipts must be controlled by a senior and sign at the amount on the duplicate receipt. The money must be counted. Cheques must be checked for post-dated or stale, properly completed and signed. The money received must balance with the total of the receipts. Banks have prescriptions according to which quantities of the different denominations must be placed together. Cash control slip Slip on which an outline is given of the number of notes or coins of all the different denominations of money. This is send to the bank when depositing Control slip must balance with the deposit slip

10. The deposit slip The deposit slip is made out in duplicate and sent to the bank with the money and cash control slip. Bank cashier will sign and stamp both copies. The bank takes the original copy and the duplicate is handed to the organisation.

11. Current accounts Also cheque book account is the most popular type of corporate banking account and it works as follows: The account-holder deposits money and withdraws with a cheque. A credit balance on the account earns a small interest, while high interest is charged when account is overdrawn. The bank charges a fee, called bank charges, to operate a client’s account The current account is used: As a safe place to deposit money into To make payments by cheque For transferring money to pay for things by means of a debit order To borrow money by means of an overdraft

12. Cheques A cheques is the unconditional written instruction to a bank to pay. Example is shown on book 2 (pg. 127). The parties to a cheque are: The drawer: the account holder who instructs the bank to pay. He/she signs the cheque. The drawee: a bank where the drawer has his/her account. The payee: beneficiary receiving payment.

13. Crossing cheques: to make it safer Types of crossing: General crossing: parallel lines are drawn without any words or with words “not negotiable” No particular bank or account specified and the cheque is still transferable to somebody else but may not be cashed over the counter. Special crossing: Cheque is deposited into a specific bank account. The negotiability of this cheque is limited to clients of the named bank. Restrictive crossing: The words ‘payee only’ are written between the lines of the crossing. The payee is the only beneficiary.

14. Endorsement of cheques Blank endorsement: When the beneficiary of a cheque wishes to cash the cheque she must sign at the back. It becomes negotiable and can be cashed by anyone. Special endorsement: Its when beneficiary endorses the cheque to a specific person. Dishonouring (non-payment) of cheques Reasons for dishonouring of cheques: R/D (refer to the drawer): insufficient funds Payment stopped Account closed Stale: valid for six months Amount differ Signature missing Signature differs Alteration without signature Any other irregularity on the cheque