What Is a Cash Transaction?

Cash transactions are commodity transactions that are paid directly by cash. It is closely related to spot trading. Although it is an ancient trading method, it runs through the entire historical journey after the emergence of commerce. In cash transactions, the value movement, ownership transfer, and commodity entity movement of goods are completed at the same time. This movement of integrating business flow and logistics is an essential feature of cash transactions. The function of cash transactions is to ensure the opposite movement of commodity circulation and currency circulation. ^[1]

Cash transaction

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Cash transactions are commodity transactions that are paid directly by cash. It is closely related to spot trading. Although it is an ancient trading method, it runs through the entire historical journey after the emergence of commerce. In cash transactions, the value movement, ownership transfer, and commodity entity movement of goods are completed at the same time. This movement of integrating business flow and logistics is an essential feature of cash transactions. The function of cash transactions is to ensure the opposite movement of commodity circulation and currency circulation. ^[1]

The main advantage of cash transactions is that cash is convenient and flexible, so most small transactions are completed by cash. ^[2]

Professor Fisher of Yale University in the United States proposed the famous "trading equation" in the 1920s, also known as the Fisher equation. Fisher's theory was first reflected in his book The Purchasing Power of Money, published in 1911. He believes that there are buyers and sellers in every transaction, so for the overall economy, the value of sales must equal the value of income, and the value of purchases must equal the amount of money in circulation in the economy and the average number of currency transfers in the same period Product. Suppose M represents the average amount of money in circulation during a certain period, V represents the velocity of money in circulation, P represents the weighted average of the prices of various commodities, and T represents the number of transactions of various commodities. ^]

In order to strengthen the management of cash, to keep abreast of the dynamics of cash receipts and payments and inventory balances to ensure the safety of cash, the company must set up a "cash journal". Cashiers should collect and pay vouchers in accordance with the order in which cash operations occur, one by one Register at time. At the end of each day, the balance of the registered "cash journal" and the actual inventory should be checked to ensure that the accounts are consistent. If the account is found to be inconsistent, the cause should be promptly identified and handled. At the end of the month, the balance of the Cash Journal must match the balance of the Cash General Ledger account. Enterprises with foreign currency cash shall set up a cash journal for detailed accounting separately in RMB and various foreign currencies. ^[4]

Cash transactions and revenue and expenditure are most likely to cause loopholes in management. For companies with frequent cash transactions, if there is no rigorous cash management control method, it is most likely to cause fraud. In order to strengthen the control of cash transactions, enterprises should seize the following key points for control: ^[5]

1. Establish a guarantee system to control cash handlers

As long as the employees in the company handle cash, they must be guaranteed. The guarantee methods include "guarantor", "guarantee", "guarantee of important persons of the company", etc., and after the guarantee is filled in, the enterprise also needs to check to confirm the fact. It is the most basic first defense principle for companies to ensure that they do not harm the interests of the company during their career.

2. Strengthen the recording and verification of cash income

When cash is collected, some kind of record should be generated immediately, such as issuing a serial numbered invoice, issuing a shipping order, or using a cash register. The sales department preferably has a centralized payment collection office, where the staff will issue invoices, or stamp the invoices with "invoice stamps". If every income is recorded, it is naturally easy to check and if two or more people have been involved, the chance of cheating will be reduced.

3 Regularly check the income and expenditure of accounts

For the cash control of the sales department, the sales supervisor is required to return the total amount of the invoices for the previous day's sales and the deposit amount deposited in the bank on a daily basis, and deposit the cash income from the previous day to a nearby bank before 10 am on the day; the company The cashier at 11am went to the bank to print the passbook, or checked the income and expenditure status of the account on the computer through online banking to confirm that all the cash in all departments had been transferred to the company account. To resolve quickly.

4 Establishing a "petty money" system, dedicated funds

The focus of management is "all receipts, full cash deposits; all expenditures, unified payments; cash income, not transfer payments. The only cash on hand, only petty funds." For the expenses of the sales department, a petty cash system can be established, and another account is opened at the bank to handle petty cash expenditures. When making payments every day, in addition to petty cash, write checks as much as possible. This is one of the main points of internal control. . Don't handle cash receipts and payments in the same bank account, and forbid supervisors to charge petty cash out of cash income daily and deposit the net cash balance in the bank.

5. Separation of duties between "manager" and "manager"

Cashiers who handle cash receipts and payments, and accounting tasks such as managing cash and bookkeeping, should be performed by different personnel to achieve mutual restraint.

6. Full-time letter opener

If the company is also in charge of mail order and the number is large, it is best to set up a letter-breaker; if there is no special staff, non-accounting and non-cash personnel should also serve. After opening, the remittance list should be filled out according to the check in the letter, and the cashier deposit should be given, and then the accountant will deposit the person's account according to the remittance list and the sender's book.

7. Strengthen the management of checks and current accounts

Customers should be asked to check as soon as possible when bills are settled monthly. When receiving a payment, you should ask the customer to make a crossed-out payable cheque. In the case of a spot cheque, the customer should ask the customer to indicate "prohibition of endorsement transfer". For each customer's book balance, the accountant or auditor should check it at any time, check whether there is any outstanding account and collect it. In addition, a spot check must be used to issue a statement, and the customer is requested to sign the reconciliation. Customer accounts are collected by a person, which is ideal. However, at present, companies are often collected by business personnel, which is prone to misappropriation and swallowing. Therefore, customers' accounts should be checked and inspected.

8. Establish temporary spot checks

Corporate executives (or internal auditors) should make unannounced inspections of petty funds and cash and cash transactions processes and practices, and urge managers and recorders to remain vigilant and not negligent.