Question

You are employed as a bookkeeper for a new business. As part of the set-up you have been asked to create procedures for each aspect of the business’s cash accounting system. The procedures are designed to ensure each aspect of the accounting system is used in a consistent manner. Each procedure should be approximately 1 page long.

You will need to create procedures for:

1. Chart of Accounts numbering.
2. Verifying source documents.
3. Processing receipts.
4. Processing payments.
5. Petty cash processing.
6. Processing credit card transactions.
7. Processing credit card payments.
8. Reconciling bank statements.

Answer 1

1. Chart of Accounts numbering.

The COA is the main part of any accounting and this should be consistent. Below is the procedure that need to be followed.

Gl starting with	Nature of Gl
1	Assets
2	Liabilities
3	revenue income
4	Direct expenses
5	payroll Gl's
6	indirect expenses
7	other expenses
8	financial expenses

2. Verifying source documents.

For the invoices that are entered, they need to be matched with the PO

For the bank transactions, they are to be reconciled with the bank statements.

For the Payroll that has been booked, this has to be matched with the payroll reports.

For the payments that are set up, the bank details are required to be matched from the invoice.

3. Processing receipts.

The receipts should be matched with the bank statements, if they are not in the bank statement they have to be checked for the reimbursements

4. Processing payments.

Bank details are to be matched form the vendor invoices and due list should be matched from the AP aging list

5. Petty cash processing.

This should be done on the basis of signed receipts from the owner.

6. Processing credit card transactions.

CC transactions should be matched for professional and personal expenses.

7. Processing credit card payments.

CC payments are to be matched with the Due date and cc statement

8. Reconciling bank statements.

Bank should be reconciled at the month end and with the downloaded bank statement