Need a little help and to check my understanding in this situation.
Working with a manual analysed cash book. In August there was an insurance payment which went in the insurance column. But it was an overpayment, so in September the insurer sent the money back on cheque. If it was just returned by bacs I could make a minus entry in the same column. But the cheque was paid in with a number of other sales cheques on 1 paying in slip. So I'll be inputting this on the income side. But do I need to reflect this lowering of the value of the 'insurance' analysis column/account on the expenditure side? How should I do so? If I just enter a minus figure on the expenditure side as well then the reconciliation obvious won't be correct.
If if was double entry accounts obviously I'd just debit bank and credit insurance. But as it's a cash book what is best practice to ensure the accountant gets the correct account balances and that the cash book reflects the bank?!
have you got a final column for other entries. If so I would post there and put the insurance expense nom code next to it, with a brief explanation of it being insurance payment refunded. It will then get posted as a credit to insurance.
I don't have a final column. Is there another option? I don't have any info about the nominal codes the accountant uses.
Aside from the entry itself, the accountant has just took last years books. What would be his likely process working from a manual cash book? Will he go through every entry firstly to ensure all are correctly analysed and whether allowable as an expense, then amend any of the totals I've noted accordingly, then post them to his record of each account balance, before preparing the financials and tax return? There's no month end contact between me and the accountant, just at year end.
I know accountants receive books in a manner of ways, manual, excel, sage etc, shoebox! With a software package I know there's an accountant link, and that all the accounts balances are there anyway. So I guess the accountant will just prepare the return accordingly, especially if it's a company with good accounts practice in place, not entering a myriad of disallowable expenses. With an excel template or manual book, will the accountant keep some form of document that has account balances on that will be updated once books are finalised? I guess it depends on the size of company too and the accountant's methods.
Thanks again Rob, I'm trying to get a clearer understanding of the bigger picture! I know there isn't a single answer for all so I appreciate your time.
just show it as a negative figure in the Insurance column and write a little note somewhere on the page explaining what has happened and where the cheque was paid in.
This way it can be easily reconciled when reconciling the bank account for that particular month.
If the accountant is up to scratch, he will go over the cash book in detail to an extent. they should check the totals and make sure everything agrees. If you have written notes on the page, this will explain what has happened and the accountant will pick this up and treat accordingly.
its no big deal. As long as you explain it (and im, sure they will have come across it loads of times before) they will know what to do with it.
