EM2962 - Examining Accounts: Cash-Flow Tests
‘Minus Cash’ - Week 1
Cash transactions are isolated as follows
| Week 1 | £ | £ | £ |
| Recorded: cash brought forward | 200 | ||
| ### Takings as recorded | |||
| Monday | 140 | ||
| Tuesday | 162 | ||
| Wednesday | 84 | ||
| Thursday | 175 | ||
| Friday | 182 | ||
| Saturday | 276 | 1019 | |
| ### Cash available (brought forward and recorded) | 1219 | ||
| ### Cash payments as recorded: | |||
| Monday : Sundries | 35 | ||
| Tuesday: Sundries | 10 | ||
| Windows | 15 | ||
| Wednesday: | - | ||
| Thursday: Sundries | - | ||
| Friday: Casual wages | 120 | ||
| Saturday: Own drawings | 180 | ||
| ### Total Cash payments | (360) | ||
| Bankings: | |||
| Wednesday: | 400 | ||
| Friday | 400 | ||
| ### Total Banked | (800) | ||
| Cash carried forward | (200) | ||
| Cash used (spent, banked, carried forward) | (1360) | ||
| Deficiency (used - less available) | (141) |
Casual wages and payments into the bank are capable of independent verification, drawings are unlikely to be overstated and sundries even if overstated are not large enough to have created the deficiency. The explanation for most if not all of it will be, one or both of
- all takings were not recorded or
- the amount brought forward or carried forward was incorrect.
If own drawings have been understated, the real deficiency will in fact be greater.
(This content has been withheld because of exemptions in the Freedom of Information Act 2000)
A cash test run to the banking date (Friday) would still show a deficiency even assuming that all Friday’s takings were available for banking and no cash was carried forward to Saturday, that is
| Cash available up to Friday (£200 + £743) | £943 | |
| Cash used to Friday | £180 | |
| Plus banked | £800 | (£980) |
| Deficiency | (£37) | |
| An unexplained ‘surplus’ would arise on Saturday, that is | ||
| Takings | 276 | |
| Own drawings | (180) | |
| Alleged carried forward | (60) | |
| ‘Surplus’ | 36 |