Cash receipt definition
/What is a Cash Receipt?
A cash receipt is a printed statement of the amount of cash received in a cash sale transaction. A copy of this receipt is given to the customer, while another copy is retained for accounting purposes. A cash receipt contains the following information:
The date of the transaction
A unique number that identifies the document
The name of the payer
The amount of cash received
The payment method (such as by cash or check)
The signature of the receiving person
Cash Receipt vs. Invoice
A cash receipt shows that money has been received in a business transaction, while an invoice is a request for payment. Thus, a cash receipt represents cash in hand, while an invoice represents the future receipt of cash.
Accounting for a Cash Receipt
The receipt of cash triggers an accounting entry, so that the transaction is recorded in your accounting records. The standard cash receipt journal entry for a sale transaction is a debit to the cash account and a credit to the sales account. Or, if the cash receipt is related to the sale of a company asset, such as machinery, then the credit part of the journal entry is an offset to the relevant asset account.
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Cash Receipt FAQs
How long should cash receipt records be retained?
Cash receipt records should be retained for the period required by tax law, audit needs, contracts, and company policy. A common minimum is several years, often matching income tax and sales tax record retention periods. Longer retention may be needed for disputes, grants, regulated industries, or unresolved audits.