If you keep cash at your business to make change or purchases, you should keep track of it in Wave.
Setting Up Accounts for Float or a Cash Box
If you’re managing a standard amount of cash, like a cash register float, or other fund, you’ll need to create two custom accounts in the Chart of Accounts to keep track of this cash.
- Create a custom account in your Chart of Accounts under Cash and Bank to account for the cash.
- Create a custom expense account in your Chart of Accounts under Operating Expenses called Cash Over/Short. This account will keep track of any differences between the expected cash, and the counted cash when you make a deposit.
- On the Account Reconciliation page, you’ll see the newly created cash account listed in the Other Accounts section at the bottom of the page.
Counting the Cash and Making a Deposit
- Count the total amount of cash in the Cash box. This should comprise the original amount of float, plus any sales that you need to deposit, minus any purchases that you made using the cash.
- Click Get Started on the Account Reconciliation list for your cash account. Enter the value of the cash that you counted and the date.
If the amount matches what you’ve recorded in the cash account, the account is Reconciled!
- When you deposit cash at the bank, make sure to categorize the bank deposit as a transfer from the Cash Box account in Wave.
Accounting for an Over or Short
When dealing with cash, it’s common to have small discrepancies in the change that’s been made. Using an Over/Short account lets you keep an eye on how much these calculation errors are costing your business.
Let’s say you keep $100 in a cash box in your office, and have made $205 in recorded sales since you last counted the cash box. However, when you count the cash, you only have $302 in cash. You’ll see a $3.00 difference when you enter a reconciliation balance.
- Go through the recorded transactions in the account to check for accuracy. Match the transactions in Wave to the record that you use to record cash transactions for your business, like receipts, invoices, or cash vouchers.
Based on the sales you recorded, you expected to deposit $205 to the bank, but only end up depositing $202. You need to account for the missing $3 as an expense to the Over/Short account.
- On the Transactions page, add a transaction to account for the discrepancy. Create a withdrawal transaction if the amount you counted is too little (short), and a deposit transaction if the amount you counted is too much (over). Make sure this transaction is recorded on the date that you counted the Cash Box.
- Categorize the new transaction to the Over/Short account. To categorize an amount over the expected total, categorize the transaction as a Refund From the Over/Short account.
- When the deposit for $202 is imported via your bank connection or statement upload, categorize this as a transfer from the Cash Box account.