Cash in Transit – What Do You Mean By It?

Cash in transit is the process of transporting money and other valuable items, such as banknotes or coins, from one place to another. In accounting, it may also refer to maintaining a specific account for recording such events that allows businesses to track monthly transactions accurately during the commencement and end of financial periods. Money being transported in armored vehicles also falls under the category of cash in transit services.

Cash in Transit in Accounting

In the practice of accounting, companies often have an account in their list of accounts named ‘cash in transit’. Accountants keep an entry in it when money is being transported from one location to another. As soon it reaches its destination, the money is put into the account. All government are mandatorily required to include the activity of their cash in transit account in financial reports and documents for complying with the accepted principles of accounting by law.

Deposit in Transit

This type is a slight variation of the accounting concept. A company might have received money as cash or cheques and kept records of the transaction, but the transaction is absent from bank statements of the company. For instance, a certain retail shop receives money for its goods on the 30th of June. The money may be deposited in the bank after a few hours or during a weekend. The transaction will be recorded on financial statements as deposit ‘in transit’ on 30th June, because the bank would not show funds deposited until July.

Bank Reconcillations

At the commencement of every month in the accounting cycle of a firm, bank statement and financial statements of the previous month are reconciled with each other. This process involves adjustments of money in cash in transit. It helps to spot any error that the bank might have made including improper records of cash or cheque deposits. Bank reconcillations even highlight erroneous records in financial statements like cheques that were deposited but not entered into the accounting system or transposed numbers.

Armoured Services

Armoured vehicles are basically provided by security firms or other similar companies. These vehicles provide physical money transportation services to banks, retail shops and businesses working with a great deal of cash. Many businesses hire armoured cars and vans to carry cash and cheques safely to banks. Such vehicles may transport deposits, replenish ATM machines and brings coins to businesses such as casinos. This kind of service is generally used to reduce the risk associated with employees handling the cash.