INTACC1

5th Meeting
12.07.2021

Proof of Cash (part 1)

Proof of Cash- is an expanded version of bank reconciliation.

It is a “two-date reconciliation” used to arrive at the adjusted balance of cash with
simultaneous reconciliation of “cash receipts” and “cash disbursements” for a certain
period of reporting.

Proof of cash is also known as four-column reconciliation

● Previous period
● Cash receipts
● Cash disbursements
● Current period

The reconciliation items for proof of cash are almost the same with a normal bank
reconciliation which also be used to adjust the following:
● Cash receipts
● Cash disbursements
● Bank credits
● Bank debits

Book Reconciling Items Bank Reconciliation Proof of Cash

1. Credit memos The same The same
2. Debit memos The same The same
3. Book errors the same The same
a. Cash receipts (will be adjusted with credit memos and errors)
b. Cash disbursements (will be adjusted with debit memos)

Bank Reconciling Items Bank reconciliation Proof of Cash

1. Deposit in Transit The same The same
2. Outstanding checks The same The same

3. Bank errors The same The same

a. Bank credits (will be adjusted with deposit in transit and errors on credit)
b. Bank debits (will be adjusted with outstanding checks and errors on
debit)
Reconciliation methods:
1. Adjusted Balance
2. Book to Bank
3. Bank to Book

For Book Records CURRENT PERIOD

Description Prior Period Receipts Disbursement Current
s Period

Unadjusted xxx xxx xxx xxx

Balances

Credit Memos

Prior period xxx (xxx)

Current Period xxx xxx

Debit Memos

Prior Period (xxx) (xxx)

Current Period xxx (xxx)

Book errors

Prior period

Receipts xx/(xx) (xx)/xx

(xx)/xx (xx)/xx
Disbursements

Current Period

Receipts xx/(xx) xx/(xx)

xx/(xx) (xx)/xx
Disbursements

Adjusted Bal. xxx xxx xxx xxx

For Bank records: CURRENT PERIOD
Description Prior Period Credits Debits Current
Period

Unadjusted xxx xxx xxx xxx

Balance

Deposit in
Transit

Prior Period xxx (xxx)

Current Period xxx xxx

Outstanding
checks

Prior Period (xxx) (xxx)

Current Period xxx (xxx)

Bank Errors

Prior Period

Credit xx/(xx) (xx)/xx

Debit (xx)/xx (xx)/xx

Current Period

Credit xx/(xx) xx/(xx)

Debit xx/(xx) (xx)/xx

Adjusted Bal xxx xxx xxx xxx