Category: 

What is Cash Control?

Money orders have to be included in cash control.
Cash control requires monitoring of all cash received and disbursed.
Stack of coins.
Article Details
  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Images By: Dvortygirl, Neirfy, n/a
  • Last Modified Date: 20 April 2014
  • Copyright Protected:
    2003-2014
    Conjecture Corporation
  • Print this Article
Free Widgets for your Site/Blog
Artists tend to grow up in wealthier households than doctors.  more...

April 24 ,  2005 :  The world's first cloned dog was born.  more...

Cash control is a process that is used to verify the complete nature and accurate recording of all cash that is received, as well as any cash disbursements that take place. As a broad principle of responsible financial accounting, this process takes place in any environment where goods and services are bought and sold. As such, businesses, non-profit organizations and households all employ its basic tenets.

To fully understand cash control, it is helpful to understand what is meant by cash, when it comes to financial accounting. Along with referring to currency and coin, this term is also understood to include forms of financial exchange like money orders, credit card receipts, and checks. Essentially, any type of financial exchange that can be immediately negotiated for a fixed value qualifies.

Cash control means competently managing all these types of financial instruments by maintaining an accurate tracking system that accounts for both receiving and disbursing the cash. Designing this process is thpically not difficult, and there are a few basic elements that will be incorporated into the process, regardless of whether the procedure is used in the home or in an office or business environment.

Ad

First, all transactions related to cash must be documented and recorded immediately. The accrual method of accounting, in which earnings and expences are recorded when they are incurred, rather than when they are received or paid, is not used. Each cash receipt is recorded upon reception, while each disbursement is entered at the time that the payment is released. This mode of documentation requires only some basic templates that will record the necessary data. For the home, a checking account can be used to track all cash deposited into a common account for the good of the home, and the check book register can serve as the basic document that keeps track of the inbound and outbound transactions.

Next, solid procedures require that there be multiple, but limited, individuals who have access to the cash, which serves two purposes. First, people can be held accountable for the way that the cash is managed. Second, having at least two people oversee the process helps to ensure that important transactions can take place at any time, even if one individual is unavailable for some reason.

Cash control also demands that the documents related to the task are kept separated from the physical location of the cash. In other words, the accounting book that is used to record the cash transactions should not be kept in the safe with the currency, money orders, and checks. This simple precaution helps to ensure that the task of altering the physical evidence related to cash in hand is more difficult, and therefore minimizes the chances for theft to occur.

Ad

Discuss this Article

anon336866
Post 7

Which are the methods of controlling cash in an organisation?

anon73072
Post 4

Does cash control mean anything more than the procedures used to prevent losses from fraud or theft? Explain.

anon68260
Post 3

Thank you for the informative article. There are many things to pay attention to when operating a business. Internal theft is rampant. --Anthony

anon29429
Post 2

Why is it important to have effective control of cash?

Post your comments

Post Anonymously

Login

username
password
forgot password?

Register

username
password
confirm
email