Cash Accounting - Transaction Date

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The Monaro Folk Society uses cash basis accounting, not accrual accounting. Cash basis accounting is a very simple form of accounting.

  • When a payment is received the revenue is recorded as of the date of the receipt of funds — no matter whether the payment is for next year's membership or events, and irrespective of the date shown on paperwork or when the funds are banked. The transaction date is always the date of receipt.
  • When payments are made, the payment is recorded as of the date the cheque is written by the first signatory, or an electronic payment initiated, irrespective of when the expense was or will be incurred.

If we all pay special attention to showing our transaction dates correctly and uniformly, reconciliation between various spreadsheets becomes easy - transaction date totals will match where they should. To take some examples:

At events: entries, memberships, ball tickets - the doorkeepers show the event date on all door returns, membership forms, receipts, etc. The receipt date is the key to reconciliation so it must always be written on forms by the doorkeeper.

Memberships by mail: These are forwarded by the secretary or person clearing the PO box to the membership secretary, often as a re-direction of an envelope. The membership secretary marks the date received by the membership secretary on all paperwork, records this date in the membership database, and advises MFS-Accounts of received dates, descriptions and amounts. The same applies to any payments sent straight to the membership secretary, the date that memberships by mail are received by the membership secretary is always the transaction date.

PayPal: The PayPal receipt date is used, irrespective of when the receipts are transferred from PayPal to the MFS Bank Account.

Reconciliations: Door returns, memberships, ball takings etc should match the MFS accounts with transaction date being the matching key.

The bank statement PLUS receipts not yet banked LESS un-presented cheques should match the MFS Accounts spreadsheet.

Monthly Close-Off: During reconciliation, missed transactions may be added to the month with their standard transaction date. When reconciled the month is closed and reports generated. No further postings will be made for the closed month.

So, if email notifications are received late, after the month has been closed off, the bookkeeper will change the transaction date to the first of the current month, and advise the sender to change their record to match.

See also: Financial Processes

Content Manager: MFS Committee. Status: Confirmed by MFS Committee 10Feb15.

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