What account 5110 is for
In a modern organisation most of the money moves through the bank rather than the cash desk: customers transfer payments to the bank account, and the organisation pays taxes, settles supplier invoices and pays loan interest through the bank as well. Every receipt and every payment on this soum bank account is collected in 5110 (Instructions, para. 224).
Group 5100 has a single sub-account, 5110. Other places where money is kept have accounts of their own:
| Where the money is | Account |
|---|---|
| In the cash desk, in soums | 5010 "Cash in national currency" |
| In the soum settlement account at a bank | 5110 "Settlement account" |
| In a foreign currency account at a bank in Uzbekistan | 5210 "Foreign currency accounts in the country" |
| In a foreign currency account at a bank abroad | 5220 "Foreign currency accounts abroad" |
Foreign currency accounts are listed in paragraph 227.
An asset account: what that means
In the chart of accounts, account 5100 has type "A" (asset). Under paragraph 3 of NAS No. 21, in an asset account the balance and increases of resources are shown on the debit side and decreases on the credit side. Applied to money in the bank:
- money comes into the account: 5110 is debited;
- money leaves the account: 5110 is credited;
- the balance is a debit balance and shows how many soums are in the bank account right now.
Which documents the entries are based on
Under paragraph 225, entries in this account are based on the bank statement and the cash and settlement documents attached to it. In other words, the accountant does not record a guess such as "the payment has probably gone out": a movement that does not appear in the bank statement does not go into 5110.
If the organisation has soum settlement accounts at several banks, analytical accounting is kept separately for each account (same paragraph). For example, a company with accounts at two banks splits 5110 into two analytical parts and reconciles each of them with its own bank's statement.
What goes to the debit side
The most common receipts from the table in paragraph 226: payment from customers for sales, cash handed over from the cash desk, an advance from a customer, a founder's contribution to the charter capital, the return of an advance paid earlier, and the repayment of a short-term loan granted earlier. Their journal entries are in the table below.
What goes to the credit side
The main payments from the same table: settling debts to suppliers and contractors, transferring tax debts to the budget, paying dividends to founders, repaying a short-term bank loan, paying an advance to a supplier, and withdrawing cash into the cash desk to pay wages.
Points to watch
- A bank error. If checking the statement reveals an amount posted to the account by mistake, under paragraph 225 it is recorded through 4860 "Claims receivable" or 6960 "Claims payable". For the case where the bank wrongly debited an incorrect amount from the organisation's account, the table has a ready-made row: Dr 4860 Cr 5110-5530 (para. 216, row 12).
- Cash collection. Money handed from the cash desk to a cash collector has not yet reached the bank, so it is first recorded in 5710 "Cash (transfers) in transit" (para. 238). Once it reaches the bank: Dr 5110 Cr 5710 (para. 239, row 7).
- Buying foreign currency. When soums are transferred to buy foreign currency, the table points to 5530 "Other special accounts": Dr 5530 Cr 5110 (para. 226, row 5).
- Month-end reconciliation (practical tip). The 5110 balance at the end of the month must match the balance in the bank statement. If there is a difference, usually a movement in the statement has been left out or recorded twice. A credit balance on 5110 is also a sign of an error: an asset account has a debit balance.
Main journal entries 12
Debit and credit are as in the model table of Appendix 2 to NAS No. 21. The transaction text briefly restates the table row.
| Transaction | Debit | Credit | Source |
|---|---|---|---|
| Payment from a customer for products, goods, work, services and other assets sold received in the bank account | 5110 | 4010 | NAS No. 21, para. 226, row 3 |
| Cash from the cash desk deposited into the bank settlement account | 5110 | 5010 | NAS No. 21, para. 226, row 4 |
| A prepayment (advance) from a customer received in the bank account | 5110 | 6310–6390 | NAS No. 21, para. 226, row 10 |
| A founder who subscribed for shares transferred their contribution to the bank account | 5110 | 4610 | NAS No. 21, para. 226, row 11 |
| An advance paid earlier returned to the settlement account | 5110 | 4310–4390 | NAS No. 21, para. 226, row 8 |
| Money withdrawn from the settlement account into the cash desk to pay wages, benefits, bonuses and similar payments | 5010 | 5110 | NAS No. 21, para. 226, row 13 |
| Debt to a supplier or contractor paid from the bank account | 6010 | 5110 | NAS No. 21, para. 226, row 15 |
| An advance paid to a supplier through the bank | 4310–4330 | 5110 | NAS No. 21, para. 226, row 16 |
| Tax debt to the budget transferred from the bank account | 6410 | 5110 | NAS No. 21, para. 226, row 18 |
| Dividends declared to founders paid through the bank | 6610 | 5110 | NAS No. 21, para. 226, row 20 |
| Short-term bank loans and borrowings repaid from the bank account | 6810–6840 | 5110 | NAS No. 21, para. 226, row 22 |
| A claim lodged against the bank for an amount it wrongly debited from the organisation's account | 4860 | 5110–5530 | NAS No. 21, para. 216, row 12 |
Example
At the start of the month the settlement account of "Qamashi kafel" LLC (a fictional company) held 25,000,000 soums. During the month the bank statements showed the following movements:
| No. | Transaction | Dr | Cr | Amount, soums |
|---|---|---|---|---|
| 1 | A construction firm paid its debt for tiles received last month | 5110 | 4010 | 18,600,000 |
| 2 | Cash takings from the shop deposited at the bank | 5110 | 5010 | 4,200,000 |
| 3 | A new customer transferred a prepayment for the next batch | 5110 | 6310 | 6,000,000 |
| 4 | Debt to the cement and adhesive supplier settled | 6010 | 5110 | 14,500,000 |
| 5 | Tax debt to the budget transferred | 6410 | 5110 | 3,900,000 |
| 6 | Cash withdrawn into the cash desk to pay wages | 5010 | 5110 | 9,800,000 |
Transaction 3 is not revenue: the tiles have not been shipped yet, so the money is recorded in 6310 as a liability to the customer.
Account 5110:
| Item | Amount, soums |
|---|---|
| Opening balance | 25,000,000 |
| Debit turnover (1, 2, 3) | 28,800,000 |
| Credit turnover (4, 5, 6) | 28,200,000 |
| Closing balance | 25,600,000 |
Check: 25,000,000 + 28,800,000 − 28,200,000 = 25,600,000 soums. The bank's month-end statement must show exactly the same balance; if there is a difference, compare the movements in the statement with the entries one by one (practical tip; example prepared by the author).