Each cash transaction is recorded in the accounting records as it occurs, either through the cash disbursements process or cash receipts process.
In theory, the bank balance per the bank statement should equal the bank balance per the general ledger or the physical petty cash balance on hand should equal the petty cash balance per the general ledger.
However, this is not always the case!
As we mentioned, cash transactions should be recorded as soon as they occur. This is either through the cash receipts process or the cash disbursements process.
Qs for 4 volunteers.
Volunteer 1 – draft the typical cash receipts journal entries – Volunteer 3 should review these entries
Volunteer 2 – draft the typical cash disbursements journal entries – Volunteer 4 should review these entries
Go through bullet 2
– We know that in theory this should happen, but in reality that is not always the case!