Financial and Accounting Procedures in the Office
What the exam tests
This domain tests cash handling, vouchers, petty cash, bank reconciliation, procurement records and internal control. Expect practical arithmetic and questions on who should authorise or reconcile.
Core rules and concepts
- The accounting cycle moves from source documents to journals, ledgers, trial balance and financial statements.
- Every payment should be supported by an authorised voucher and receipt; every receipt should be recorded and banked promptly.
- The imprest system keeps a fixed petty cash float. Expenses are recorded, and reimbursement restores the float to the fixed amount.
- Bank reconciliation explains the difference between the cash book and the bank statement using outstanding cheques, deposits in transit, bank charges and direct credits.
- Procurement records normally include purchase requisition, quotations, purchase order, goods receipt note, invoice and payment voucher.
- Internal control separates authorisation, custody and recording. The person who keeps cash should not also reconcile the bank account.
Worked example
Cash book balance is 10,000. A cheque for 1,500 has been issued but not presented, and bank charges of 100 appear only on the statement. Reasoning: the cash book has already reduced the 1,500, so add it back to reach the statement; the 100 charge is not yet in the cash book, so deduct it. Bank statement balance = 10,000 + 1,500 - 100 = 11,400.
Traps that cost marks
Paying petty cash without vouchers. Letting the same person authorise and reconcile. Ignoring outstanding cheques. Reversing the signs in reconciliation. Recording a purchase order as an expense before goods are received.