Financial and Accounting Functions in the Office
This domain covers the routine financial work of an office: recording transactions, handling cash and vouchers, reconciling the bank, running payroll and maintaining internal control. Expect small numerical questions on petty cash and trial balance.
Bookkeeping and accounting
Bookkeeping records transactions systematically; accounting classifies, summarises and interprets them. Flow: journal → ledger → trial balance → trading and profit and loss account → balance sheet.
Cash and vouchers
Every payment needs a supporting voucher with an authorised signature. The imprest system keeps a fixed float: the cashier is reimbursed exactly what was spent so the float returns to the original figure.
Bank reconciliation
Differences between the cash book and bank statement arise from cheques issued but not presented, cheques deposited but not credited, bank charges, interest, direct debits and standing orders. The reconciliation statement explains them.
Payroll
Attendance and leave data → gross pay → deductions (provident fund, ESI where applicable, professional tax, income tax TDS, loan instalments) → net pay → payment and records.
Control
Budget and budgetary control, internal check (no single person controls a transaction end to end), internal audit, fixed asset register, safe custody of cash and cheques, GST-compliant invoices and records.
Worked example
Petty cash imprest is ₹5,000. Payments during the month: ₹1,850 and ₹1,240. Cash in hand = 5,000 − 1,850 − 1,240 = ₹1,910. Reimbursement = 5,000 − 1,910 = ₹3,090, restoring the float. Reasoning: the imprest is restored, not increased; the amount reimbursed equals the vouchers passed.
Traps
Reversing debit and credit in the cash book; forgetting to record the reimbursement; treating capital expenditure as revenue expenditure; ignoring unpresented cheques in reconciliation; allowing the same person to authorise and pay.
Key points: journal-ledger-trial balance-final accounts flow; every payment needs an authorised voucher; imprest float is restored, not enlarged; reconciliation explains timing differences; internal check separates authorisation, custody and recording; payroll deductions reduce gross to net.