Learning Outcomes
After completing this article, you will be able to describe the main business documents used to evidence receipts in a business, including receipts, till rolls, and remittance advices. You will learn how each document is created and used to support accounting entries, explain their function in cash and credit transactions, and identify their importance in internal control and record-keeping for the ACCA FA1 exam.
ACCA Recording Financial Transactions (FA1) Syllabus
For ACCA Recording Financial Transactions (FA1), you are required to understand the key documents and records associated with recording business receipts and payments. This article covers:
- The purpose and content of receipts, till rolls, and remittance advices in business transactions
- The process by which these documents are produced and used to record financial events
- The role of business documents in supporting accounting entries and maintaining internal control
- How receipts and related documents are checked, matched, and retained for audit and reference
Test Your Knowledge
Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.
- Which type of document provides an itemised total of all cash sales processed by a retail till each day?
- What is the main purpose of a remittance advice sent with a payment to a supplier?
- True or false? A receipt proves that a payment has been made.
- Why should a till roll be compared to cash counted at the end of the day?
- Which document is essential for identifying which invoices are being paid when settling multiple outstanding bills?
Introduction
Accurate recording of business receipts is fundamental to good accounting practice. Businesses process many different types of payment, from immediate cash sales to payments from credit customers. Proper documentation is required to show evidence of payment, allow effective control of money received, and ensure the right entries are made in the financial records. This article explains the essential documents used for this purpose: receipts, till rolls, and remittance advices. Understanding these documents is critical for the exam and for daily bookkeeping work.
Key Term: receipt
A document providing written evidence that a payment has been received by the business.Key Term: till roll
A printed record generated by a cash register or electronic till listing all transactions recorded during a shift or business day.Key Term: remittance advice
A document sent with a payment to inform the recipient which invoices or accounts are being settled.
Receipts: Proof of Payment
A receipt is a formal acknowledgment that payment has been made. It is usually provided by the seller to the buyer as soon as funds are accepted, whether by cash, cheque, card, or another method. Receipts typically show the date, amount paid, method of payment, and details of what was purchased. They are critical for demonstrating that a transaction has occurred.
Receipts provide essential audit evidence and support the recording of sales and income in the accounting system. When a business receives funds, the corresponding receipt is used to justify recording the transaction and to address any customer queries that may arise later.
Worked Example 1.1
You buy stationery for your business at a local shop, pay in cash, and receive a printed receipt showing the items purchased and the total cost of $12.
Answer:
The receipt provides evidence that a cash payment of $12 has been made for business expenses. This document should be used to support the entry of the expense in the accounting records.
Receipts and Accounting Entries
Receipts are directly linked to the double-entry system. When money is received, the cash or bank account is debited, and the corresponding income account or receivable is credited, using the receipt as source evidence.
Exam Warning Never record an income or sale without appropriate document evidence such as a receipt. Missing documentation may lead to errors or audit concerns.
Till Rolls: Daily Transaction Record
Businesses that operate cash registers or electronic point-of-sale (EPOS) systems produce a till roll—a comprehensive printout or electronic record that lists every transaction processed during a set period, such as a business day. The till roll originates from the till and captures all forms of receipt—cash, debit/credit card, vouchers, and sometimes returns/refunds.
Key Term: point-of-sale (POS)
The location and system where a sale is completed and payment is received, commonly a till or cash register.
The till roll provides a running log of all transactions, showing each sale, payment, and often the correct breakdown by type of payment. At the end of the day, the total on the till roll is matched against the actual cash and card takings. Differences may indicate errors or possible theft.
Worked Example 1.2
A retail business reviews its till roll at the end of the day and notices the total cash sales recorded are $840. However, the cash in the register amounts to only $830.
Answer:
There is a $10 shortfall between the till roll and the cash counted. The business should investigate for possible errors, unrecorded payouts, or theft.
The Role of Till Rolls in Control
Till rolls are essential for daily internal control. They allow comparison between cash/card received and sales recorded, making it easier to identify discrepancies and ensure all income is properly deposited and reported.
Revision Tip In the exam, remember: Till rolls should always be checked against cash and other receipts to detect errors early.
Remittance Advices: Identifying Payments
When a business makes a payment, especially to settle one or more outstanding invoices, it should provide a remittance advice. This document lists the invoices or account items being paid and may show deductions such as early payment discounts.
Remittance advices are commonly enclosed with cheque payments or sent electronically (e.g., by email or BACS system) in the case of bank transfers. Receiving businesses use remittance advices to match payments to outstanding amounts, update customer or supplier accounts, and reduce errors in allocation.
Worked Example 1.3
A company sends a supplier a payment of $2,500 to settle three different outstanding invoices. Along with the payment, a remittance advice is sent listing: Invoice #101 ($900), Invoice #104 ($850), Invoice #120 ($750).
Answer:
The supplier uses the remittance advice to credit the correct invoices, ensuring records are up to date and disputes are avoided. Exam Warning If no remittance advice is provided, suppliers may not know which invoices have been paid. This could lead to incorrect statements or chase letters for outstanding balances already settled.
The Importance of Retaining and Reconciling Documents
Receipts, till rolls, and remittance advices are not just needed at the time of payment or receipt—they must be retained as part of a business’s accounting records. Documents should be kept securely and be easily retrievable for audit, dispute resolution, or tax purposes.
Regularly reconciling till rolls and receipts to cash received, and ensuring remittance advices match records in receivables and payables ledgers, strengthens internal control and supports accurate accounting.
Worked Example 1.4
A business is preparing its monthly accounts and notes that some cash receipts are missing supporting documents. Upon reviewing till rolls and remittance advices, it identifies which amounts can be verified and which need follow-up with staff.
Answer:
Sound documentation ensures every transaction is evidenced and errors can be corrected promptly.
Summary
Effective bookkeeping relies on accurate business documentation. Receipts provide direct proof of payment. Till rolls offer a complete record of daily transactions and facilitate control over sales income. Remittance advices clarify how payments should be allocated against outstanding accounts. All such documents should be checked, matched to relevant entries, and securely stored for future reference.
Key Point Checklist
This article has covered the following key knowledge points:
- Define and explain a receipt, till roll, and remittance advice
- State how each document is produced and used in business transactions
- Describe how till rolls and remittance advices support reconciliation and allocation of payments
- Understand the importance of retaining documents for audit and dispute resolution
- Recognise the internal control value of regularly matching documentation to accounting records
Key Terms and Concepts
- receipt
- till roll
- remittance advice
- point-of-sale (POS)