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When will the cash Book have a Credit Balance?
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Answer Posted / h.r. sreepada bhagi
If the Cash book shows credit balance, then the accounting
system is not properly followed. Basic logic is, you can not
pay what you don't have. Negative or credit balance appears
only if the total payments is more than the opening balance
of cash plus receipts from various sources including
withdrawal from bank as per the books of accounts.
Following are some of the reasons why cash book may show
credit balance :-
1. Not entering or short accounting of the opening cash balance.
2. Not/Short accounting all the cash withdrawn from bank/s.
3. Accounting of a payment more than once or accounting
excess amount than actual payment.
4. Use of personal cash for making official payments in the
event of shortage of cash in the office.
5. Failure to account cash receipt from the promoters or
cash received from customers or others.
This situation is avoided by reconciling the bank account
and matching the physical cash with the book balance on
daily basis. It's also important that the cash book is
checked by Accounts Supervisor or the Manager on daily basis.
| Is This Answer Correct ? | 9 Yes | 3 No |
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