Definition Cash Memo for Recording of Transactions

Definition Cash Memo for Recording of Transactions

Cash Memo for the recording of transactions

Cash Memo is a commercial document issued by the seller to the purchaser when cash is received as a payment. When a trader sells goods for cash, he gives a cash memo and when he purchases goods for cash, he receives a cash memo. Details regarding the items, quantity, rate and the price are mentioned in the cash memo. It works as a proof of cash payment made. When the cash is received for the sold goods, no debt is raised against it.

A cash memo is a written document usually used in many business transactions. It is a source document in which all transactions pertaining to cash sales or purchases are to be recorded. The purpose of a cash memo in business is to have a record of all the transactions of goods and services. Sales and purchases are the major features of any business enterprise. For recording cash sales and cash purchases, cash memos serve as source documents. In case of a cash sale, the seller prepares the cash memo and hands it over to the purchaser. It can be seen as an equivalent to the invoice but for cash sales. This helps the seller to accumulate all its cash sales along with resolution, tax payments, analysis, inventory planning, cash management, etc.

Similar to a receipt, a cash memo is given to a client or customer after payment has been received by the business. On the basis of cash memos, these transactions are then recorded in the book of accounts. In the audit, the foremost duty of the auditor is to confirm the cash book with reference to the cash vouchers. A cash memo serves as legal proof that the business has received the cash from the client. It acts as proof for all cash sales made by a business. On the other hand, it acts as proof for cash acquire made by a person or business. Most often a cash memo is prepared in a pair so that a replacement copy is present with the seller as well.

The cash memo includes the subsequent depiction:

  • Date and Serial Number of cash memo,
  • Name and address of the supplier,
  • Customer or Purchaser’s Order number,
  • Name and address of the buyer,
  • Description of goods,
  • Quantity of goods and Rates of Goods,
  • The unit price of goods
  • Discount (if any, both for trade and cash discount, Trade discount or cash discount, to be shown separately),
  • Tax (VAT or Service tax as the case may be)
  • Total Amount Received
  • Signature of the cashier.
  • Sales Tax number of purchaser and supplier in case of sale of goods.
  • Service tax number of the supplier in case of sale of services.
  • The total amount of cash memo must be written in words and figures.
  • The cash memo must be signed by the duly authorized person.
  • The area of Jurisdiction must be defined in the cash memo.
  • Normally, E. & O. E. also printed on all cash memos. It means if there is any mistake in the cash memo that is subject to correction.

There are different types of memo used in businesses. Below are the main types of memos.

Request Memo – a request memo is used when writing for an exacting request. A request memo includes the request and the cause for the request.

Confirmation Memo – when two parties consent on something, a confirmation memo is used to authenticate it. A written memo is significant to evidently state the message that you want to say.

Periodic Report Memo – a periodic report memo is used in companies where a monthly or quarterly report is submitted.

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