Cash Receipts Cycle 2mz5j

CASH RECEIPT CYCLE

MAIL ROOM

CASH RECEIPT

CUSTOMER

CHECK REMITTANCE LIST

CHECK REMITTANCE ADVICE RECONCILE RECONCILE CHECKS CHECKS WITH WITH THE THE RA RA AND AND PREPARE PREPARE REMITTANCE REMITTANCE LIST LIST

REMITTANCE REMITTANCE LIST LIST REMITTANCE REMITTANCE LIST LIST

REMITTANCE REMITTANCE LIST LIST

CHECK REMITTANCE ADVICE

S RECEIVABLE

REMITTANCE LIST REMITTANCE ADVICE

CONTROLLER REMITTANCE LIST

MAIL ROOM

CASH RECEIPT

CUSTOMER

CHECK REMITTANCE LIST

CHECK REMITTANCE ADVICE RECONCILE RECONCILE CHECKS CHECKS WITH WITH THE THE RA RA AND AND PREPARE PREPARE REMITTANCE REMITTANCE LIST LIST

REMITTANCE REMITTANCE LIST LIST

PROCESS PROCESS CASH CASH RECEIPT RECEIPT

DEPOSIT DEPOSIT SLIP SLIP

S RECEIVABLE

REMITTANCE LIST REMITTANCE ADVICE CASH CASH RECEIPT RECEIPT JOURNAL JOURNAL JOURNAL JOURNAL VOUCHER VOUCHER

DEPOSIT DEPOSIT SLIP SLIP DEPOSIT DEPOSIT SLIP SLIP

REMITTANCE REMITTANCE LIST LIST

REMITTANCE REMITTANCE LIST LIST

CHECK REMITTANCE ADVICE

CHECK CHECK REMITTANCE REMITTANCE LIST LIST

FILE FILE

BANK BANK

GENERAL LEDGER

CONTROLLER REMITTANCE LIST

JOURNAL VOUCHER

MAIL ROOM

CASH RECEIPT

CUSTOMER

CHECK REMITTANCE LIST

CHECK REMITTANCE ADVICE RECONCILE RECONCILE CHECKS CHECKS WITH WITH THE THE RA RA AND AND PREPARE PREPARE REMITTANCE REMITTANCE LIST LIST

REMITTANCE REMITTANCE LIST LIST

PROCESS PROCESS CASH CASH RECEIPT RECEIPT

DEPOSIT DEPOSIT SLIP SLIP

S RECEIVABLE

REMITTANCE LIST REMITTANCE ADVICE CASH CASH RECEIPT RECEIPT JOURNAL JOURNAL JOURNAL JOURNAL VOUCHER VOUCHER

DEPOSIT DEPOSIT SLIP SLIP DEPOSIT DEPOSIT SLIP SLIP

REMITTANCE LIST REMITTANCE ADVICE

REMITTANCE REMITTANCE LIST LIST

REMITTANCE REMITTANCE LIST LIST

CHECK REMITTANCE ADVICE

UPDATE UPDATE AR AR SUB SUB LEDGER LEDGER

CHECK CHECK REMITTANCE REMITTANCE LIST LIST

FILE FILE FILE FILE

BANK BANK

AR AR SUB SUB LEDGER LEDGER SUMMARY SUMMARY

GENERAL LEDGER

CONTROLLER

SUMMARY

REMITTANCE LIST

JOURNAL VOUCHER

BANK BANK

UPDATE UPDATE GENERAL GENERAL LEDGER LEDGER

GENERAL GENERAL LEDGER LEDGER

SUMMARY JOURNAL VOUCHER DEPOSIT DEPOSIT SLIP SLIP

SUMMARY JOURNAL VOUCHER

FILE FILE

RECONCILE RECONCILE DEPOSIT DEPOSIT SLIP SLIP FROM FROM BANK BANK WITH WITH BATCH BATCH TOTAL TOTAL FROM FROM S S RECEIVABLE RECEIVABLE AND AND CASH CASH RECEIPTS RECEIPTS AND AND REMITTANCE REMITTANCE LIST LIST

Cash Receipts Processes • Customer checks and remittance advices are received in the Mail Room. ▫ A cash prelist is prepared by a mail room clerk and the prelist and the checks are sent to Cash Receipts. ▫ The cash prelist is also sent to A/R and the Controller.

Cash Receipts Processes • Cash Receipts: ▫ verifies the accuracy and completeness of the checks ▫ updates the cash receipts journal ▫ prepares a deposit slip ▫ prepares a journal voucher to send to G/L

Cash Receipts Processes • A/R posts from the remittance advices to the s receivable subsidiary ledger. ▫ A summary of the postings is sent to G/L periodically.

Cash Receipts Processes • G/L department: ▫ reconciles the journal voucher from Cash Receipts with the summaries from A/R ▫ updates the general ledger control s

Cash Receipts Processes • The Controller reconciles the bank s.

Internal Controls in the Cash Receipts System • Authorization Control ▫ Proper authorization of transactions (documentation) should occur so that only valid transactions get processed.  Authorization should take place when posting a cash payment received to a customer’s (cash pre-list).

Internal Controls in the Cash Receipts System • Segregation of Duties ▫ Transaction authorization should be separate from transaction processing. ▫ Asset custody should be separate from asset recordkeeping. ▫ The organization should be so structured that the perpetration of a fraud requires collusion between two or more individuals.  

Cash receipts are separate from ing records – A/R and cash . A/R subsidiary ledger is separate from G/L.

Internal Controls in the Cash Receipts System • Supervision ▫ Often used when unable to enact appropriate segregation of duties.  Supervision of employees serves as a deterrent to dishonest acts and is particularly important in the mailroom.

Internal Controls in the Cash Receipts System • ing Records ▫ With a properly maintained audit trail, it is possible to track transactions through the systems and to find where and when errors were made: pre-numbered source documents, special journals, subsidiary ledgers, general ledger & files.  ing records that are being used in the cash receipts process are: remittance advices, checks, remittance list, cash receipts journal, A/R subsidiary ledger, A/R control & cash .

Internal Controls in the Cash Receipts System • Access Controls ▫ Access to assets and information (ing records) should be limited.  Physical access to cash and access to records such as the s receivable subsidiary ledger and cash journal should be restricted.

Internal Controls in the Cash Receipts System • Independent Verification ▫ Physical procedures as well as record-keeping should be independently reviewed at various points in the system to check for accuracy and completeness:  General ledger reconciles journal vouchers from cash receipts and s receivable.  Bank reconciliation

Espinoza, Glennamae D. Lopez, Nikka Amiela M. Mercado, Jessica Mungcal, Angelica M. Samson, Marrydel E. Tiongco, Julie-Anne D. Velasco, Rolain B. V - BSA