PROOF OF CASH

• A proof of cash is an expanded reconciliation in that it includes proof of receipts and

disbursements.
• This approach may be useful in discovering possible discrepancies in handling cash
particularly when cash receipts have been recorded but have not been deposited.

There are three forms of proof of cash, namely:

 Adjusted Balance Method
 Book to Bank Method
 Bank to Book Method
 TERMINOLOGIES
 Book debits refers to cash receipts or all items debited to the cash in bank account.

 Book credit refers to cash disbursement or all items credited to the cash in bank
account.

 Bank debits refer to all items debited to the account of the depositor which include
checks paid by bank and debit memos. In the absence of any statement to the contrary,
bank debits are assumed to be checks paid by bank.

 Bank credits refer to all items credited to the account of the depositor which include
deposits acknowledged by bank and credit memos. In the absence of any statement to
the contrary, bank credits are assumed to be deposits acknowledged by bank.
 PROOF OF CASH
• Also called as four-column or two date bank reconciliation
A two-date bank reconciliation becomes complicated only when certain facts or data are omitted,
hence the necessity for computing them.
Among others, the omitted information may be any one or a combination of the following:

a. Book Balance – beginning and ending b. Bank Balance – beginning and ending

Computation of Book Balance Computation of Bank Balance

Balance per book - beginning of month XXX Balance per bank - beginning XXX

Add: book debits during the month XXX Add: Bank credits during the month XXX

Total XXX Total XXX

Less: Book credits during the month (XXX) Less: Bank debits during the month (XXX)

Balance per book - end of the month XXX Balance per bank - end of the month XXX
 c. Deposit in Transit – beginning and ending d. Outstanding Checks – beginning and endings

Computation of Outstanding Checks XXX

Computation of Deposits in Transit
Outstanding Checks, Beginning
XXX
Deposits in Transit - Beginning
Add: Cash receipts deposited this Add: Check Disbursement, this month
month Book Credits XXX
XXX Less: Debit Memos, last month (XXX) XXX
Book Debits
Less: Credit Memos, last Total Checks to be paid by bank
(XXX) XXX Less: Checks actually paid by bank, this
month
XXX month
Total
Less: Deposits acknowledged by
bank this month Bank Debits XXX
Bank Credits XXX Less: Debit Memos, this month (XXX) (XXX)
Less: Credit Memos, this (XXX) (XXX)
month Outstanding Checks, Ending XXX
Deposit in Transit- Ending XXX
A proof of cash
A. is a physical count of currencies on hand at the end of reporting
period.
B. is a formal statement showing the total cash receipts during the year.
C. is a four-column bank reconciliation showing reconciliation of cash
balances per book and per bank at the beginning and end of the
current month and reconciliation of cash receipts and cash
disbursement of the bank and the depositor during the current month.
D. is a summary of cash receipts and cash payments
A proof of cash
A. is a physical count of currencies on hand at the end of reporting
period.
B. is a formal statement showing the total cash receipts during the year.
C. is a four-column bank reconciliation showing reconciliation of cash
balances per book and per bank at the beginning and end of the
current month and reconciliation of cash receipts and cash
disbursement of the bank and the depositor during the current month.
D. is a summary of cash receipts and cash payments