does the company that you keep books for do a lot of cash transactions in this episode of quickbooks
online crash course you will learn the best way to handle and manage cash related transactions
if you have any questions about this topic you can leave them in the comments section below and
i'll do my best to help you and of course if you feel the video helped you i hope you will click
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in theory any business that receives or pays cash for services should have one specific
physical place where the cash is located this place should be secure like a lock box
or office safe where money can be put into or taken out when you have a transaction very often
this place is simply the owner's wallet however as long as the transactions are recorded properly
the amount of physical cash should be reflected in the account balance in quickbooks online
so how do we set up for cash transactions well there should be one account in the chart of
accounts that records any change in the amount of cash this account is a bank type of account
it is a bank type of account because you will keep records of transactions for this
exactly the same way that you would keep records of a bank account you will deposit
or put money into this place and you will withdraw or pay money from taking out money from this
place the account name can be petty cash if you intend on paying only small amounts of incidental
expenses now you may remember in our chart of accounts we already have an account called
cash on hand that will represent the physical cash that we will use to manage the business
and notice it's already a bank type of account because that's what we set up when we prepared
the quickbooks online account for this crash course so what is our first example
let's imagine on january 12th of 2022 we withdrew five hundred dollars from the chase bank account
to establish the cash on hand fund that will be used to pay expenses
since you are depositing money into the cash account or the lock box you may use the deposit
window even though there might be other more advanced options that you could learn about later
that would record this transaction and give you the same result but let's keep it as simple as
possible click new so what date is that that's january twelfth now what will be the result
after this transaction well this is what the trial balance looks like right now
before we take five hundred dollars from the bank account and put it into cash on hand but at the
moment we remove 500 from the bank the balance will go down to 4 550. and of course because that
500 is in the cash and bank cash on hand excuse me cash on hand will show up for the first time as
five hundred dollars and this will be the result of that transaction so we click new and we go
to the bank deposit window now you have to change this to cash on hand because as we learned before
in the bank deposit window the bank account on top is the one that the money is being deposited into
the account at the bottom is where the money is coming from and in this case the money is coming
from the bank account to the cash on hand you can leave received from blank in this case
and the date that you're taking the money from the bank to the cash on hand is january 12.
of course you would put in all the other details but mainly
the amount is 500 and this would be the simplest way to record taking money from the bank account
down here and bringing it to the cash on hand
when we click save and close you can click reports trial balance
and you can see the results are exactly as what we expected the cash in chase bank went down to 4550
and cash on hand showed up in the trial balance for the first time as five hundred dollars
now let's see what it's like to pay cash from the cash fund let's imagine
on january thirteenth two thousand twenty two we withdrew fifty dollars from the cash box
for a business related transportation with ned's taxi he gave you cash receipt number whatever and
you must use the expenses window to record any payments from the cash lock box now what will be
the result well if you're paying from cash on hand fifty dollars that means that the balance will
decrease by 50 and hundred and become dollars but if you paid fifty dollars more for transportation
with that cash you now have fifty dollars more in transportation expense and that will become
a hundred and fifty dollars and these will be the numbers after you record this transaction
we go to the top left then click new and for cash payments we click expenses now
the payment account that you're paying from is cash on hand because in the expense window this
will be the account that you're paying the money from now we're paying ned's taxi and we get this
message that's a little distracting let's click no because it's asking should we use information
from a previous nets taxi transaction to put into this transaction because it thinks it's helping us
just click no and then you yourself can put in transportation expense
and you can put in the amount
fifty dollars and don't forget
to put in the number on the cash receipt now when we click save and close the results in the
trial balance are exactly what we expected cash on hand has decreased to 450 dollars
and transportation expense has increased to a hundred and fifty dollars
let's do example three let's imagine that betty boop paid wanda our company is wanda we got paid a
hundred dollars cash for doing an editing service and of course we have to give a receipt to betty
because of that so we gave her handwritten receipt number whatever and we will use the deposit window
because we are depositing into the cash lock box for money we earned for editing services
what will be the result well cash on hand will decrease by two hundred and fifty dollars
because we have two hundred and fifty dollars less on hand and it will become three hundred
but that two hundred and fifty is now in the bank account so the cash and bank will increase to four
thousand eight hundred dollars after this deposit in the top left we click new and go to the right
and click bank deposit the date is january 15th now remember in the deposit window on top
you have to choose the account you're depositing to and in this case we're actually depositing
to the chase bank from the cash on hand and that's why if the money is coming from the cash on hand
to the bank account that they should be in these respective positions and the amount
two hundred and fifty dollars now when we click save and close the results
are exactly as what we expected we now only have three hundred dollars
on hand because we now have four thousand eight hundred dollars in the bank account
you