Internal Accounting Control is used to protect assets and to ensure the reliability of records and statements. Cash is the single most tempting and most liquid asset a business owns, so cash controls get special attention: who is allowed to touch it, who is allowed to record it, and how every dollar is documented.
Electronic payment methods reduce (but do not eliminate) cash-handling risk. Debit Cards are a method of transferring funds between two parties electronically, taking money directly from a customer's bank account at the moment of sale. Electronic Funds Transfer is a cash exchange system where bank accounts are accessed electronically over a secure network, used for everything from payroll direct deposit to paying suppliers without writing a single cheque.
Cash Short and Over
Even with good controls, a cash register will occasionally not balance exactly — a cashier gives $2 too much change, or a customer's coin gets dropped and never found. Cash Short and Over is an account used to record shortages and overages of cash. A shortage is debited (it behaves like an expense); an overage is credited (it behaves like revenue). Small, occasional amounts are normal; a pattern of large or frequent shortages is a red flag worth investigating.
The Petty Cash Fund
A Petty Cash Fund is an amount of cash kept on hand to make small payments — postage, a small office-supply run, a delivery tip — where writing a full cheque would be impractical. Every payment out of the fund requires a Petty Cash Voucher: a signed authorization for small payments, which becomes the source document proving where the cash went. Many businesses also use a Voucher Cheque, a two-part form consisting of a cheque with an attached statement describing the purpose of the payment, when the amount is too large for petty cash but still needs clear documentation.