Whati is Slip System?
Slip is a method of rapid posting in books maintained under Double Entry principle. Under this system, posting is done from slips and not from journals or cash books. Slips are loose leaves of journals and these are supplied either by the customers or by the bank staff.
It becomes necessary for a bank to know the position of its individual customer’s account at any time and to see that the transactions are recorded as soon as they take place.
The same is not actually possible if transactions are recorded in bound books. So, original cheques and paying-in-slips are used as vouchers. Consequently, the cashier, for this purpose, credits cash account for receiving cheques and it passes on to the ledger-keeper concerned for debiting the customers’ accounts.
On the contrary, for paying-in-slips, the cashier debits cash account and passes on the same to the ledger-keeper concerned, for crediting the customers’ accounts. In this way, the Double Entry posting is completed. The transactions which are not covered by original slips are posted by means of ‘dockets’ which are made out by the bank staff. These are used for posting purposes.
Advantages of Slip System
The advantages of this system are:
- No need for subsidiary books;
- Helps in keeping customers account up-to-date;
- It reduces the possibility of errors and frauds;
- It saves a lot of time since it is prepared by the customers themselves;
- It helps in auditing;
- Proper evidence for future when needed;
- Provide reliability in accounts as slips are filled by customers themselves;
- It provides a good system of internal check etc.
Disadvantages of Slip System
The system is also not free from problems. Following are some shortcomings of slip system:
- It suffers from the risk of loss of slips;
- Misappropriation or destruction of slips since they are loose;
- Where customers are in large in a bank, it is difficult and expensive to keep record date-wise;
- Difficult to fill by the uneducated customers.