8.1 Cash Flashcards
What is cash in hand?
Physical cash kept by the business, inside a cash register or safe.
What is cash at bank?
Cash deposited with the bank.
How do businesses pay money?
Businesses pay money either in cash, cheque, or electronic funds transfer.
What happens to cash accounts when a business pays money?
The balance in the cash in hand or cash at bank account will decrease.
What is a common cash transaction?
Payments to suppliers.
What are the double entries for recording payments to suppliers?
Dr Trade payables (- liability)
Cr Cash at bank / Cash in hand (- asset)
This reflects the decrease in liabilities and assets.
What is a cheque?
A one-time written or printed instruction to the bank to pay a specific amount of money to the stated payee from the payer’s account.
What is FAST?
An electronic funds transfer service that enables customers to transfer Singapore Dollar funds from one bank to another almost instantly.
What is PayNow?
A service that rides on the FAST payment system to allow fund transfers using NRIC/Unique Entity Number (UEN)/Mobile instead of bank account numbers.
What forms of payment can businesses receive?
Businesses can receive money in cash, cheque, or electronic funds transfer.
What happens to the cash balance when a business receives money?
The balance in the cash in hand or cash at bank account will increase.
What is a common cash transaction for businesses?
A common cash transaction is collections from customers.
What are the double entries for recording collections from customers?
Dr Cash at bank / Cash in hand (+ asset)
Dr Discount allowed (+ expense)
Cr Trade receivables (- asset)
What happens when a business receives a cheque?
The business will record an increase in the cash at bank account.
What is recorded when a cheque is dishonoured?
A decrease in the cash at bank account is recorded.
What happens to the cash discount when a cheque is dishonoured?
The cash discount that was given previously will also be withdrawn.
What are the double entries for recording a dishonoured cheque?
Dr Trade receivables (+ asset)
Cr Cash at bank (- asset)
Cr Discount allowed (- expense)
What is a dishonoured cheque?
A cheque is dishonoured when the bank rejects the cheque.
What happens if a cheque has expired?
It is no longer valid if it was dated six months ago.
What is a post-dated cheque?
A cheque written for a future date that the bank will only pay on or after that date.
What does ‘INCOMPLETE’ mean regarding a cheque?
Information on the cheque is not consistent or complete.
What are examples of inconsistent information on a cheque?
The amount written in numbers does not match the amount written in words, or the signature is different from the authorised version in the bank’s records.
What are examples of incomplete information on a cheque?
There is no date, amount to be paid, or signature.
What could cause a payer’s bank account to lead to a dishonoured cheque?
The account does not have enough money, is closed, or is frozen.
Why might a bank freeze an account?
A bank may freeze an account if it suspects illegal activities such as money laundering.
