Accounting All-in-One For Dummies

Chapter 3

Proving Out the Cash

In This Chapter

Understanding the purpose of closing out the cash

Counting your company's cash

Finalizing the cash journals

Using temporary posting journals

All business owners — whether the business is a small, family-owned candy store or a major international conglomerate — like to periodically verify how well their businesses are doing. They also want to be sure that the numbers in their accounting systems actually match what's physically in their stores and offices. After they check out what's in the books, these business owners can prepare financial reports to determine the company's financial success or failure during the last month, quarter, or year. This process of verifying the accuracy of your cash is called proving out the cash.

This chapter explains how to ensure the cash counts are accurate, finalize the cash journals for the accounting period, prove out the bank accounts, and post any adjustments or corrections to the general ledger.

Why Prove Out the Cash?

You're probably thinking that proving out the cash is a major, time-sucking endeavor. ...