Question

Case 9. Explain following points regarding “Vouching of Cash Receipt” Transactions” with suitable business example. (5 Marks) 1. Cash Receipt should be received for the business purpose Example II. Cash should be receiving by authorized one. Example III. Documented Evidence of cash receipt transaction should be kept Example IV. Cash Receipt transaction should be of applicable financial year. Example

Answer 1

1. Cash receipt should be received for business purpose -

Example - Business purpose involves sale of products or services. On sale of products and services, the cash receipt pertaing to these activity is considered for business purpose.

2. Cash should be received by authorized one -

Example - Sale should be done to one who have goodwill in market in terms on timely payments. And the purchaser should be authorized by the law (having propoer registrations) to conduct their business and sound enough to provide cash to seller.

3. Documentd evidence of cash receipt transaction should be kept -

Example - Cash receipt voucher issued by creditor which we need to keep as evidence. This helps us in auditing as well. Auditor have right to ask for the proofs of cash transactions.

4. Cash Receipt transaction should be of applicable financial year -

Example - If seller have sell their goods in March'2020 month and the financial year end for seller accounts is April'2019 to March'2020 than seller must ensure to get cash before 31st March 2020.

5 - Record of cash receipt transaction should be maintained properly -

Example - Records of cash receipt should be maintained properly to ensure the book keeping as per accounting standards. According to law and auditing, one should always keep all documents related to transactions which provide as an evidence for that transaction in cash or kind.