One of the most asked question from accounting users and data operators is: What is difference between cash receipts and cash payments?. therefore in this post , we will consider cash receipt and cash payments in below subjects:
- Definitions in accounting concepts
- Journal Entry
- Cash flow statement
Difference between cash receipts and cash payments
Cash receipt mean receiving cash from customers and cash payment mean cash paying to vendors. It is simple at the First of all, but in voucher format and journal entry they are complete have different accounting identity. cash terms covers money in hands in company, money in cashiers and capital in bank accounts. in some companies cash only mention to cash in hand. because they trade for cash only like groceries shops.
cash receipt will increase amount of cash in cashier and vise versa
Journal entry of cash receipt make cash account credit and payer account debit. because cash flow moves from payer to cash account but journal entry for cash payment is vise versa, cash account will debit and payee account will be credit.
These examples of cash transactions by iGreen accounting software
Example of Cash receipt
A sample of cash receipt here is received is $210 from customer. so that you see cash account has been credited as amount of 210
Example of Cash payment
A sample of cash payment here is amount of $870 to vendor. however you see debit amount of 870.
Note: iGreen adds voucher of cash payment after voucher of cash receipt and calculates total balance of cash account at the end of report.
Remember after any cash payment to vendors or cash receipt from customers, be sure to print its voucher and get a signature from payee or payer to prevent your business from any financial problem in the future.