Bookkeeping All-in-One For Dummies, 2nd Edition

Chapter 3

Proving Out the Cash

IN THIS CHAPTER

Counting your company’s cash

Finalizing the cash journals

Balancing out your bank accounts

Posting cash-related adjustments

All business owners — whether the business is a small family-owned candy store or a major international conglomerate — like to periodically test how well their businesses are doing. They also want to be sure that the numbers in their accounting systems match what’s physically in their stores and offices. After they check out what’s in the books, these business owners can prepare financial reports to determine the company’s financial success or failure during the past month, quarter, or year. This process of verifying the accuracy of your cash is called proving out.

The first step in proving out the books involves counting the company’s cash and verifying that the cash numbers in your books match the actual cash on hand at a particular point in time. This chapter explains how you can test to make sure that the cash counts are accurate, finalize the cash journals for the accounting period, prove out the bank accounts, ...