Cash Applications Test Clause Samples
The Cash Applications Test clause establishes criteria or procedures for verifying how incoming payments are applied to outstanding invoices or accounts. Typically, this clause outlines the methods for matching payments to specific debts, such as requiring remittance details or specifying the order in which payments are allocated (e.g., oldest invoices first). Its core practical function is to ensure transparency and accuracy in the application of cash receipts, thereby reducing disputes over payment allocation and maintaining clear financial records.
Cash Applications Test. Select a sample of 5 cash receipts from a recent cash collections report and determine if the cash was applied to the correct invoices and if the paid invoices were promptly removed from the aging. (In your sample, attempt to select one receipt from each of the remittance locations noted in the preceding step.)