{
  "question_id": "CG-P1B-FULL-004",
  "slug": "how-to-count-and-reconcile-a-cash-drawer-against-daily-sales",
  "display_title": "How should a business count and reconcile its cash drawer or till against daily sales records?",
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  "summary": "At close, count and sign the cash before anyone sees the expected figure; a second person recounts. Expected cash is the float plus cash sales, less cash refunds, paid-outs and drops, plus pay-ins, plus any other cash received. Investigate large or recurring gaps. Record any gap as cash over or short, never by editing sales to make them agree; only a manager's or the owner's correction, made on evidence, clears one. Tie each deposit to its count sheet.",
  "body": "## What is counted, and what must be set aside first?\n\nThe count is the notes and coins in the drawer at close. Four things are identified first, because none is the day's cash takings:\n\n- **The float.** This is the fixed starting cash for making change; in OpenStax section 8.3's grocery-store model, each employee has a drawer \"with a set amount of cash.\" Record it on the count sheet each morning and take it off at close, or it overstates every day's takings by the same amount.\n- **Cash moved during the day.** A paid-out pays a small expense from the drawer, a drop moves surplus cash to the safe, and a pay-in adds change from the safe. Each gets a slip when it happens, with the receipt attached to a paid-out slip or, if there is none, an explanation written on it; one left unrecorded shows at close as an unexplained difference.\n- **Checks.** If you take them, list them separately on the count sheet, leave check sales out of expected cash and add the checks to the deposit; proving them is tender reconciliation, a separate question.\n- **Cash that is not takings.** Tips collected for staff, or a customer's deposit on a future order, would show as a false over. Take each out into its own labelled envelope listed on the count sheet and prove it against its own record, such as the tip record or deposit receipt, never against sales. A customer deposit is banked as its own line on the deposit slip; how tips are paid out and how tips and customer deposits are recorded are separate questions.\n\n## How do you work out the cash the drawer should hold?\n\nCompare the count with cash-tender sales, never total sales: notes and coins are only the cash part of the day's takings, so card, check and other non-cash sales come out first. Expected cash is the float, plus cash sales after voids, less cash refunds, paid-outs and drops, plus pay-ins, plus any other cash received.\n\n### What if a register or point-of-sale system produces the report?\n\nTake the cash figures from the day's report. Square's undated help page \"Start and end a cash drawer session\" says drawer sessions show \"starting cash amount, cash sales, cash refunds, cash paid in/out and the expected cash amount in your cash drawer,\" and that a session needs Square's Cash Management Add-on. The page is written for account owners or sellers with the reports permission, and sessions run from Reports in the point of sale app, so whoever runs the drawer may also see the expected amount. Have the verifier or owner end the session and enter the counted amount, in the app or the Square Dashboard, only after the count is signed; if the counter must keep that access, step 3's rule keeps the expected amount out of view. With any system, check that every paid-out, drop and pay-in was keyed.\n\n### What if sales are recorded by hand?\n\nIRS Publication 583's recordkeeping example, which the IRS presents as one business's records rather than a recommendation, says that without a register the owner \"would simply total his cash sale slips and any other cash received that day.\" Write each sale on a prenumbered slip showing how the customer paid; OpenStax section 8.3 notes that \"The use of prenumbered documents provides assurance that all sales are recorded.\" Total the cash slips, write a slip for any other cash received that is not a sale, such as a customer paying an account in cash, and list refunds, paid-outs, drops and pay-ins on the day sheet as they happen. Creating a record of cash sales when nothing generates a receipt is a separate question.\n\n## What does a worked day look like?\n\nA café that takes no checks opens with a 200.00 float; sales tax is left aside until the end of this section. Its end-of-day report shows card sales of 1,120.00, cash sales after voids of 755.00 and cash refunds of 25.00. The day sheet shows a 40.00 paid-out for cleaning supplies with its receipt, a 300.00 drop to the safe and no pay-ins. The counter finds 583.00.\n\n| Step | Amount |\n|---|---|\n| Float at opening | 200.00 |\n| Add cash sales (card sales left out) | 755.00 |\n| Less cash refunds | -25.00 |\n| Less paid-out | -40.00 |\n| Less drop to the safe | -300.00 |\n| Expected cash in the drawer | 590.00 |\n| Counted cash in the drawer | 583.00 |\n| Cash short | 7.00 |\n\nCompared with total sales of 1,875.00, the same drawer would look 1,127.00 short, the real 7.00 buried inside a false 1,120.00.\n\nThe deposit is the drawer's 583.00, less the 200.00 float kept for tomorrow, plus the 300.00 drop: 683.00. That equals cash sales of 755.00 less the refund, paid-out and shortage, which ties the deposit to this day. The day is recorded like this:\n\n| Account | Debit | Credit |\n|---|---|---|\n| Undeposited funds (counted cash awaiting the bank) | 683.00 | |\n| Sales refunds | 25.00 | |\n| Cleaning supplies expense (paid-out) | 40.00 | |\n| Cash over and short | 7.00 | |\n| Sales (cash tender) | | 755.00 |\n\nThe float stays in its own cash-on-hand account at 200.00, and card sales are recorded separately.\n\nIf your point-of-sale system or accounting software already posts each day's sales, refunds and paid-outs, do not post this entry too, or the day's sales and undeposited funds double; Intuit's QuickBooks help page \"Managing your Undeposited Funds account\" (updated 8/3/2026) says QuickBooks sends invoice payments and sales receipts to that account. The page adds that you don't need the account if you download transactions directly from your bank; keep it for counted cash not yet banked, because each unbanked count sheet is proved against it. Post only what the system missed, such as the shortage, then check that the day's cash takings in undeposited funds, leaving aside any card takings the system holds there, equal the count sheet's deposit:\n\n| Account | Debit | Credit |\n|---|---|---|\n| Cash over and short | 7.00 | |\n| Undeposited funds | | 7.00 |\n\nIf you collect sales tax, expected cash includes it. Credit the tax on cash sales to a sales tax payable account, money held for the state, not to sales, and debit the tax on a cash refund back to it; the undeposited-funds debit includes the tax, because it is in the deposit.\n\n## How is an over or short recorded, and where does it show?\n\nRecord sales as the report shows them, cash as counted, and the gap in a cash over and short account; editing either figure until they agree erases the evidence and leaves the cause running. AccountingTools' article on the account records a shortfall as a debit to it and an overage as a credit, and calls it an expense account usually aggregated into the \"other expenses\" line of the income statement.\n\n## What should you do when the count and the expected cash differ?\n\nBefore accepting a difference outside your tolerance, look for its cause; one within tolerance is recorded and monitored, as the table below sets out. The usual causes are a miscount, which the recount settles; a paid-out, drop, refund or pay-in never keyed or written down; a card sale rung up as cash (a false shortage) or a cash sale rung up as card (a false over); tips or a customer deposit left in the count; and change errors or theft.\n\nAccountingTools' article on the account notes that a larger balance \"is more likely to trigger an investigation, while it may not be cost-effective to investigate a small balance.\" Set your tolerance in writing so every closer applies the same one:\n\n| What the difference looks like | What to do |\n|---|---|\n| Within your tolerance and not part of a pattern | Record it as over or short, tracked by drawer and by person |\n| Outside your tolerance | Recount and work through the causes before recording anything |\n| Recurring in the same direction for one person, drawer or shift, even if each day is small | Escalate it to the owner as a pattern, with the correction log |\n\nOpenStax section 8.3 says that where one employee is consistently short, the business can investigate and monitor to determine whether the shortages \"are due to theft or if they are accidental, such as if they resulted from errors in counting change.\"\n\n### Who may correct a record to clear a difference?\n\nAn employee never clears a difference on their own drawer. OpenStax section 8.3 says an employee who makes a register mistake \"typically cannot correct the mistake,\" that \"In most cases, a manager must review the mistake and clear it before any adjustments are made,\" and that these changes are logged so managers are not clearing mistakes for specific employees in a pattern that could signify collusion. So a manager or the owner reviews evidence the operator cannot create after the fact, such as the card terminal's record of a mis-keyed sale or a drop bag in the safe, then makes the correction, initials it on the count sheet and logs it against the operator. Only a correction made this way clears a difference, and only the unexplained remainder goes to over or short. A lone closer, or a verifier who is not a manager, writes down the difference and its suspected cause and leaves the correction to a manager or the owner.\n\nThe owner reads the correction log alongside the over and short totals, because a run of cleared differences for one person is a pattern too. Voids and refunds keyed during the day can hide cash taken just as a correction can, so where your system allows, let only a manager void, refund or edit a sale; OpenStax section 8.3 notes that password protection can stop employees changing data \"without authorization.\"\n\n## In what order should the daily routine run?\n\nThe counter counts and signs before seeing the expected cash, because a count made with the target in view tends to confirm it rather than measure the drawer. Run the routine in this order:\n\n1. At opening, count the float into the drawer and record it on a new prenumbered count sheet with the date, drawer and operator, who initials it.\n2. During the day, record each paid-out, drop, pay-in and other cash received on a slip as it happens, and in the system if it can; drops go to the safe in bags labelled with date, drawer and amount.\n3. At close, stop sales without running the day's report or opening any screen that shows expected cash.\n4. The counter sets aside tips and customer deposits, lists any checks, counts the notes and coins by denomination in pen, and signs the total.\n5. The verifier recounts and signs; the two counts must agree before anything else. A lone closer skips this step, and the owner's review below stands in for it.\n6. Only now is the report run or opened; the verifier, or the lone closer, derives expected cash and enters the over or short.\n7. A difference outside tolerance is investigated, or a pattern escalated, before anything is recorded; a manager or the owner who cleared it signs the finding, never the operator.\n8. Tomorrow's float is set aside, any pay-in goes back to the change fund it came from, and each drop bag is counted against its slip; a bag that differs is a difference, investigated like any other.\n9. The deposit slip is written for the drawer count less the float and any pay-in, plus the drops, with checks listed separately, the source noted as the day's business takings, and the count sheet's number.\n10. The depositor, who is not the counter where staffing allows, banks it, attaches the bank's receipt to the count sheet and signs.\n11. The bookkeeper, who is not the depositor where staffing allows, records the day or checks what the system posted, and checks each deposit on the bank statement against its count sheet.\n\n## How is the deposit prepared and tied back to the day?\n\nIRS Publication 583 advises: \"You should deposit all daily receipts in your business checking account.\" A paid-out spends part of the receipts before they reach the bank, so the deposit falls short of the receipts by the paid-outs, and each paid-out slip with its receipt or explanation accounts for the gap. The same publication advises making all payments by check to document business expenses, so keep drawer paid-outs to the few that cannot wait. It adds that if you cannot get a receipt for a cash payment, you should make an adequate explanation in your records at the time of payment, so write on the paid-out slip what was paid, to whom and why. It also advises noting the source of the deposit on the deposit slip and keeping copies of all slips; add the count sheet's number, so each deposit on the bank statement leads back to one day's count. When the example's deposit reaches the bank, it clears that day's undeposited funds:\n\n| Account | Debit | Credit |\n|---|---|---|\n| Bank (business checking) | 683.00 | |\n| Undeposited funds | | 683.00 |\n\nIf your bank feed brings the deposit in, match it to this entry; recording it again as sales would count the day's takings twice.\n\n## What if takings are not banked the same day?\n\nEach day's count must then stay provable on its own. Record each day's takings in undeposited funds when counted; IRS Publication 583 says \"Generally, it is best to record transactions on a daily basis.\" Keep each day's deposit in its own sealed bag, labelled with the date and count sheet number, in a locked safe, and never mix days or make change from a bag. At banking, the depositor recounts each bag against its count sheet and lists each day separately on the deposit slip. After close, the safe, less floats, change fund and envelopes set aside, should hold exactly the total of the deposit amounts on the unbanked count sheets.\n\n## What records does the routine leave, and who signs them?\n\nIRS Publication 583 says you should keep supporting documents that show \"the amounts and sources of your gross receipts,\" lists cash register tapes, bank deposit slips and receipt books among the documents that show them, and says to keep supporting documents in an orderly fashion and in a safe place. The routine leaves three records for each day and drawer:\n\n| Record | What it shows | Who signs |\n|---|---|---|\n| Count sheet | Date, drawer, operator, float, count by denomination, checks, set-aside cash, paid-outs, drops, pay-ins and other cash received with their slips, expected cash, over or short, corrections, deposit amount | Counter and verifier; whoever cleared a difference initials the correction |\n| Sales record | Register tape, end-of-day report or numbered sales slips, with sales by tender, refunds and voids | Verifier, who derived the expected cash from it |\n| Deposit record | Deposit slip noting the source as the day's business takings, a kept copy, the bank's receipt and the count sheet's number | Depositor |\n\nOpenStax section 8.3 recommends closing out and reconciling the drawer \"using prenumbered forms in pen to ensure that no forms can be altered or changed by another employee who may have access to the cash.\" File the three records together by day.\n\n## Who should count, verify and deposit?\n\nIn OpenStax section 8.3's yogurt-shop example, while one employee may count the drawer and reconcile it with the sales, a different employee would recount the money, prepare the bank deposit and ensure the deposit is made at the bank. OpenStax section 8.3 explains that separating assets from custody \"ensures that the person who controls an asset cannot also keep the accounting records,\" which prevents one employee from taking income and covering it up in the records. So the operator counts, a second person verifies, someone other than the counter takes the deposit to the bank, and someone other than the depositor records it and checks each deposit on the bank statement against its count sheet.\n\nOpenStax section 8.3 notes that a small staff may mean one manager or owner has full control, and that an owner in charge of all functions \"can track all assets appropriately.\" When the owner does everything, that attention is the control. When one employee does all three, they count and sign before running the report, and the owner reviews their work:\n\n- Compare each count sheet with the sales report, and each deposit on the bank statement with its count sheet.\n- Read the refunds, voids, paid-outs and correction log for unusual items.\n- Count a drawer unannounced from time to time.\n- Watch the running over and short total for each person.\n\n## What changes with several drawers or a shift change?\n\nGive each drawer its own float, count sheet and cash over and short sub-account, with one operator at a time. OpenStax section 8.3 notes that when only one employee has access to a register, an overage or shortage \"can be traced to the one employee who is in charge of the cash register,\" and OpenStax section 8.2 lists \"cash counts at each shift change\" among potential control methods. At a hand-off, the outgoing and incoming operators count the drawer together and both sign, closing one sheet and opening the next, so any difference belongs to one shift. Derive the outgoing shift's expected cash from a report or the slips cut at the hand-off, only after both have signed, and open the next sheet with the counted amount, or with the float after the excess is dropped to the safe.\n\n## How does the daily proof support the books at period end?\n\nAt period end, the takings in undeposited funds, leaving aside any card takings your software holds there, should equal the deposits on the count sheets not yet banked, and a count of the safe should agree. The float account should equal the floats, counted on the last day, and cash over and short should equal the sum of the period's count-sheet differences. Matching deposits to the bank statement is the bank reconciliation, a separate question. An undeposited balance that no count sheet explains means a shortage or correction the system missed was not posted, a deposit marked banked never reached the bank (escalate this to the owner as a possible loss), a deposit was banked but not cleared from the holding account, or a day was posted twice; trace it before closing the period.",
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      "display_title": "How do I create a record of cash sales when nothing generates a receipt, invoice or statement?"
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      "slug": "what-is-a-bank-reconciliation-and-how-to-tie-the-books-to-the-bank",
      "display_title": "What is a bank reconciliation, who prepares it, and how do I tie the books to the bank (with a worked example)?"
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