Typically, this cash is recognized when money is received from a customer to offset the accounts receivable balance generated when the sale transaction occurred.īusinesses can operate in a variety of fashions, some of which sell products and services on credit (expecting cash payment at a later time), and some require immediate cash payment upon selling a good or service (cash sale). What is the definition of cash receipt? Simply put, a cash receipt is recognized when an entity receives cash from any external source, such as a customer, an investor, or a bank. Then the deposit is eventually traced back from the bank statement to the GL (most likely during the reconciliation process).Definition: Cash receipts are the collection of money, typically from a customer, which increases (debits) the cash balance recognized on a company’s balance sheet. The checks go to the accounting department and the payments are recorded in the general ledger (GL), credited to the customer account, and then sent to the bank for deposit, but not before the deposit is compared to the pre-list to make sure everything is there. This “pre-list” goes to the company treasurer or controller, or some other third party who is not responsible for recording them. This control measure is possible in all but the smallest companies.įor example, a company may have the person opening the mail prepare a record of the checks received as soon as they are received.
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