When do you record journal entries in the

cash receipts process?

Remember, not all actions trigger a journal

Now that we’ve looked at the physical flow, we need to focus on when journal entries are recorded.

When do you record journal entries in the cash receipts process?

When an invoice is generated, a journal entry to recognize the revenue and the cash / accounts receivable is created

Dr. Cash / accounts receivable

Cr. Revenue

Qs: So at what point in the flow would you record an entry?

The first point you would draft an entry is when an invoice is generated

Qs: What would the debit and the credit be at this point?

When do you record journal entries in the cash receipts process?

When cash is received, a journal entry to recognize the cash receipt is created

Dr. Cash

Cr. Accounts receivable

Qs: And when would the next entry be?

When cash is actually received.

Qs: What would the debit and the credit be at this point?

Why do we not record a journal entry at the following stages:

Take the customer order

Create the packing slip

Qs: There are certain steps in the process where we do not record anything. Why? Go back to the idea of when we record a transaction.

Qs: What criteria need to be met to record a transaction?

-Probably

-Reliably measure

Qs: Using those criteria, why don’t we record a transaction when:

1.We take the customer order

2.We create the packing slip