A cash receipt is a statement that is issued to a customer after purchasing a product or paying for services. The record includes essential details such as the name of the business/service provider, amount payable, name and signature of the buyer, name of the product or services, quantities purchased and their respective values, etc. after filling out the cash receipt, the seller issues one copy to the customer and retains the other copy for their records. A cash receipt is an essential tool for tracking sales.
Purpose of cash receipts
A cash receipt serves the following purposes
Proof of transaction: A cash receipt is a proof that a transaction happened between a buyer and a seller. This is an essential record, especially during audits. If you lack cash receipts for your business transactions, your accounting records are incomplete.
For refunds or deduction claims: You can use a cash receipt to claim for expense or as a deduction to sales. Additionally, if you’re registered for VAT and your input tax (VAT on expense) is more than output tax (VAT on sales), you can use the receipt to request a refund on the difference or the excess.
Tracking expenses: You can use cash receipts to track your expenses and determine where your money is going. It is possible if you can keep cash receipts for a specified period. You may also use the receipts to verify information on your tax forms.
What does a cash receipt include?
Information about the company/business: At the top of the cash receipt, the company/business names should feature followed by the address, email address, website, and phone number.
Date: It’s also essential to capture the date of the transaction on the receipt. The date should be in the dd/mm/yyyy format.
Cash receipt number: This is a unique number that identifies each cash receipt.
Received for: This is information about the product or services: In the cash receipt, you should also indicate the product or service being paid for and the quantity.
Amount: This indicates the amount that has been paid for the goods or services. This value should include a breakdown of relevant value, including any tax paid or discounts.
Paid by: Also indicate how the cash was paid; this could either be cash, check, debit, or credit.
Received from: This is the name of the person or company paying for the goods or services.
Balance: This is applicable if the buyer is paying for the goods or services by installments.
Received by: This section indicates the person who received the payment.
Cash receipt templates
A cash receipt is a simple business document that is drafted in duplicates to act as proof of a transaction. It contains vital information about the product/services, the buyer, and the seller. It’s used for various circumstances, including audits, claiming tax refunds, returning damaged goods, etc. It’s thus essential to get cash receipts any time you purchase a product or pay for services. The seller should also retain a copy of the document for accounting purposes.