Cash Receipts Cycle

7/21/2019 Cash Receipts Cycle

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CASH RECEIPT CYCLE



CUSTOMER

CHECK

REMITTANCE

ADVICE

RECONCILE

CHECKS WITH

THE RA AND

PREPARE

REMITTANCE

LIST

REMITTANCE

LIST

REMITTANCE LIST

REMITTANCE

LIST

CHECK

REMITTANCE

ADVICE

CHECK

REMITTANCE

LIST REMITTANCE LIST

REMITTANCE

ADVICE

MAIL ROOM CASH RECEIPT ACCOUNTS RECEIVABLE



REMITTANCE

LIST

CONTROLLER



CUSTOMER

CHECK

REMITTANCE

ADVICE

RECONCILE

CHECKS WITH

THE RA AND

PREPARE

REMITTANCE

LIST

REMITTANCE

LIST

REMITTANCE LIST

REMITTANCE

LIST

CHECK

REMITTANCE

ADVICE

JOURNAL

VOUCHER

BANK

CHECK

REMITTANCE

LIST

PROCESS

CASH

RECEIPT

DEPOSIT SLIP

DEPOSIT SLIP

DEPOSIT SLIP

CHECK

REMITTANCELIST

FILE

CASH

RECEIPT

JOURNAL

REMITTANCE LIST

REMITTANCE

ADVICE




JOURNAL VOUCHER

REMITTANCE

LIST

GENERAL LEDGER CONTROLLER



CUSTOMER

CHECK

REMITTANCE

ADVICE

RECONCILE

CHECKS WITH

THE RA AND

PREPARE

REMITTANCE

LIST

REMITTANCE

LIST

REMITTANCE LIST

REMITTANCE

LIST

CHECK

REMITTANCE

ADVICE

JOURNAL

VOUCHER

BANK

CHECK

REMITTANCE

LIST

PROCESS

CASH

RECEIPT

DEPOSIT SLIP

DEPOSIT SLIP

DEPOSIT SLIP

CHECK

REMITTANCELIST

FILE

CASH

RECEIPT

JOURNAL

REMITTANCE LIST

UPDATE

AR SUB

LEDGER

REMITTANCE

LIST

REMITTANCE

ADVICE

FILE

ACCOUNT

SUMMARY

AR SUB

LEDGER

REMITTANCE

ADVICE




ACCOUNT SUMMARY

JOURNAL VOUCHER

UPDATE

GENERAL

LEDGER

GENERAL

LEDGER

ACCOUNT SUMMARY

JOURNAL VOUCHER

FILE

REMITTANCE

LIST

ACCOUNT SUMMARY

JOURNAL VOUCHER

BANK

DEPOSIT SLIP

RECONCILE

DEPOSIT SLIP

FROM BANK WITH

BATCH TOTAL

FROM ACCOUNTS

RECEIVABLE AND

CASH RECEIPTS

AND REMITTANCE

LIST

GENERAL LEDGER CONTROLLER



Cash Receipts Processes

• Customer checks and remittance advices arereceived in the Mail Room.

▫ A cash prelist is prepared by a mail room clerkand the prelist and the checks are sent to CashReceipts.

▫ The cash prelist is also sent to A/R and theController.




• Cash Receipts:

▫ verifies the accuracy and completeness of thechecks

▫ updates the cash receipts ournal

▫ prepares a deposit slip

▫ prepares a ournal voucher to send to !/"




• A/R posts from the remittance advices to theaccounts receivable subsidiary led#er.

▫ A summary of the postin#s is sent to !/"periodically.




• !/" department:

▫ reconciles the ournal voucher from CashReceipts $ith the summaries from A/R

▫ updates the #eneral led#er control accounts




• The Controller reconciles the bank accounts.



• Authori%ation Control

▫ &roper authori%ation of transactions'documentation( should occur so that only valid transactions #et processed. Authori%ation should take place $hen postin# a

cash payment received to a customer)s account'cash pre*list(.

Internal Controls in the Cash ReceiptsSystem




• +e#re#ation of ,uties

▫ Transaction authori%ation should be separate from

transaction processin#.▫ Asset custody should be separate from asset record*

keepin#.

▫ The or#ani%ation should be so structured that the

perpetration of a fraud re-uires collusion bet$eent$o or more individuals. Cash receipts are separate from accountin# records A/R

and cash account.

A/R subsidiary led#er is separate from !/".




• +upervision

▫ ften used $hen unable to enact appropriatese#re#ation of duties. +upervision of employees serves as a deterrent to

dishonest acts and is particularly important in themailroom.




• Accountin# Records

▫ 0ith a properly maintained audit trail1 it is

possible to track transactions throu#h the systemsand to find $here and $hen errors $ere made:pre*numbered source documents1 special

ournals1 subsidiary led#ers1 #eneral led#er 2 files. Accountin# records that are bein# used in the cash

receipts process are: remittance advices1 checks1remittance list1 cash receipts ournal1 A/R subsidiaryled#er1 A/R control account 2 cash account.




• Access Controls

▫ Access to assets and information 'accountin#records( should be limited. &hysical access to cash and access to records such

as the accounts receivable subsidiary led#er andcash ournal should be restricted.




• 3ndependent 4erification

▫ &hysical procedures as $ell as record*keepin#should be independently revie$ed at variouspoints in the system to check for accuracy andcompleteness:

!eneral led#er reconciles ournal vouchers fromcash receipts and accounts receivable.

5ank reconciliation



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Cash Receipts Cycle

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