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What is a contra entry in the cash book? How do discounts allowed and received appear in the three-column cash book? What internal controls apply to cash and petty cash handling? What entries arise from bank charges, interest, and standing orders in the cash book? How is the receipt of capital or a loan recorded in the cash book? How are drawings recorded in the cash book? What is the treatment of cash discounts versus the cash received in the cash book? How is petty cash treated at the period end for the financial statements? How do you record dishonoured (bounced) cheques in the cash book? How is the analysis (columnar) cash book useful and how is it posted?
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Why might the petty cash book not balance and how do you investigate?

Intermediate

Answer

It may not balance due to unrecorded vouchers, arithmetic errors in analysis columns, missing receipts, cash taken without a voucher, or theft. Investigate by recounting the cash, agreeing cash plus vouchers to the imprest, re-casting the columns, checking each voucher is recorded, and reviewing authorizations. Persistent shortfalls may indicate a control failure.
Real-world example A shortfall is traced to a missing voucher for an unrecorded stamp purchase, which is then entered to restore agreement.

Common follow-ups: What should cash plus vouchers equal? | What could a persistent shortfall indicate?

Correcting Errors Bank Reconciliation Cash Book & Petty Cash
All 26 Cash Book & Petty Cash questions