PROOF OF CASH

TOPIC OUTLINE

1. Concept of Proof of Cash

2. Various formula in computing the
missing information in preparing the
proof of cash
 PROOF CASH
- Two dated bank reconciliation - Easy to prepare when no information
- Expanded reconciliation that includes is missing
the proof of - It becomes complicated when one or
1. Receipt a combination of the following is
2. Disbursement omitted:
- Useful in discovering discrepancies in a. Book Balance Beginning/
Ending
cash handling (e.g. cash receipts have b. Bank Balance
been recorded but have not been c. Deposit in Transit
deposited) d. Outstanding Checks
FORMULA IN COMPUTING
THE BOOK AND BANK BALANCES
BOOK BALANCE
Balance per book – beg. of the month Pxx
Add: Book debits/cash inflow for the month xx
Total xx
Less: Book credits/cash outflow for the month xx
Balance per book – end of the month Pxx

BANK BALANCE
Balance per book – beg. of the month Pxx
Add: Bank credits/cash inflow for the month xx
Total xx
Less: Bank debits/cash outflow for the month xx
Balance per book – end of the month Pxx
FORMULA IN COMPUTING DIT & OC
DEPOSITS IN TRANSIT
DIT – beg of the month Pxx
Add: Cash receipts deposited during the month xx
Total deposits to be acknowledge by the bank xx
Less: Deposit acknowledge by the bank during the month xx
DIT – end of the month Pxx

Outstanding checks
OC – beg. of the month Pxx
Add: Checks drawn by the company during the month xx
Total checks to be paid by the bank xx
Less: Checks paid by the bank during the month xx
OC – end of the month Pxx
PROOF OF CASH FORMULA
Summary of Treatment for Proof of Cash
Adjusted Balance Method

Beg Ending
Receipts Disbursement
Balance Balance
Cash in bank per books xx xx xx xx
Credit Memo – last month xx (xx)
Credit Memo – this month xx xx
Debit Memo – last month (xx) (xx)
Debit Memo – this month xx (xx)
Adjusted Balance xx xx xx xx
PROOF OF CASH FORMULA
Summary of Treatment for Proof of Cash
Adjusted Balance Method

Beg Ending
Receipts Disbursement
Balance Balance
Cash in bank per bank xx xx xx xx
DIT – last month xx (xx)
DIT – this month xx xx
OC – last month (xx) (xx)
OC – this month xx (xx)
Adjusted Balance xx xx xx xx
PROOF OF
CASH FORMS
1. Adjusted Balance Method
2. Book to Bank Method
3. Bank to Book Method
ERRONEOUS RECEIPTS
RECEIPTS DISBURSEMENTS
A. COMMITTED LAST MONTH
1. Corrected Last Month NO EFFECT NO EFFECT
2. Correct Current Month NO EFFECT (XX)
B. COMMITTED CURRENT MONTH
1. Correct Current Month (XX) (XX)
2. Corrected Next Month (XX) NO EFFECT
ERRONEOUS DISBURSEMENT
RECEIPTS DISBURSEMENTS
(Current Month) (Current Month)
A. COMMITTED LAST MONTH
1. Corrected Last Month NO EFFECT NO EFFECT
2. Correct Current Month (XX) NO EFFECT
B. COMMITTED CURRENT MONTH
1. Correct Current Month (XX) (XX)
2. Corrected Next Month NO EFFECT (XX)
ILLUSTRATIVE PROBLEM
ILLUSTRATIVE PROBLEM