- Cash Book Definition and 3 Types Part 1
- Benefits of a Cash Book Part 2
- How to Use a Cash Book with Examples Part 3
- Cash Book Sample Form and Template Part 4
- Cash Book Best Practices Part 5
Among the dozens of essential administrative systems that significantly contribute to the ultimate success of your company, the financial department is predominantly vital. Besides having a strong team of employees, you need to keep track of your business cash inflow and outflow.
However, with numerous aspects to consider, monitoring your payables and documenting all the financial activities can be an exceptionally overwhelming undertaking. If you are looking forward to streamlining your daily financial workflows, a cash book would be a perfect choice. This document allows you to capture daily cash flows and organize your ledger entries.
What Is a Cash Book?
In one sentence, a cash book is a basic accounting document used for recording deposits and withdraws.
Types of Cash Books
Generally, there are three main types of cash books. They include:
Simple/Single Column Cash Book
Primarily documenting cash transactions, simple or single column cash book is considered as the most basic of the three versions available. Just as its name suggests, a simple cash book features only the debit and credit columns which usually captures receipts and cash payments.
Tip: Generally, receipts (cash inflows) are recorded on the left-hand side (credit side) while debit transactions are typically captured on the right-hand side.Click here to see an excellent format of a single column cash book.
Two Column Cash Book
Unlike the above model, the 2-column cash book features an additional column which is generally used for documenting bank transactions.
To get a clear picture of a 2-column cash book, click here.
Three Column Cash Book
This advanced model is inclusive of an extra column on each side of the document. With the additional column, a 3-column cash book allows you to document cash discounts resulting from borrowing as well as discounts received from creditors.
Follow this link to see a perfect 3-column cash book sample.
Benefits of a Cash Book
Benefits of a Cash Book
Some of the common pros of this business tool include:
- Forms a great recording tool especially when looking for transactions made within a specific time period
- Consolidating multiple transactions, a cash book ensures accurate consolidation of bank statement
- Boasting of a lengthy and incredibly reliable database this meticulous document provides a preeminent point of referencing
- Incredibly comprehensive, a cash book offers additional insights important when conducting audits
- Helps you in making rational financial decisions thus regulating the expenditure
How to Use a Cash Book
Arguably, a cash book is one of the most customizable business documents. At the core of this versatile tool the most important thing to have a precise understanding of where each element should feature.
Generally, a typical cash book includes two main sections (debit and credit) which capture financial transactions. On the top first line, specifically on the credit side, this document highlights the starting cash balance commonly known as starting capital.
After doing that, the next step you will need to shift into the debit side and list out cash receipt transactions. On the credit side, however, debit transactions are reflected as deductions and are exponentially updated as your list builds up.
Sample Template of a Cash Book
While the above guidelines may prove to be somehow brief thus not providing the exact insights regarding the applicability of this document, you would probably like to increase your understanding by reading through this comprehensive cash book sample template.
This cashbook includes transactions made during the month of January 2006. The initial capital was $ 50,000
- January 5th: bought items worth $ 30,000 by cheque
- January 6th: sold items worth $ 17,000
- January 8th: withdrew $1000 for office use
- January 9th: withdrew $900 to pay for electricity bills followed a subsequent $ 700 withdrawal for paying rent (paid via cheque)
- January 10th: sold goods worth $15,000 by cheque which was followed by a cash sale amounting to $5,000 and lastly sold items worth $18000 on credit.
- January 11th: Paid wages of $2,000
- January 12th: made a cash sale amounting to $8,000
- January 14th: received a cheque worth $12,000 from customers and gave a discount of $500
- January 16th: withdrew from bank amount $2,500 for office use
- January 18th: bought items worth $12,000 (cash), $4,000 (cheque), $25,000 (on credit)
- January 20th: cash sales of $20,000 and cheque sales of $15,000
- January 22nd: Waged creditors amounted $20,000 through cheque and received $1,500 in discount
- January 24th: made cash sales amounting to $3,000 which was immediately deposited into the bank
- January 25th: paid rent by check amounting to $1500 plus wages worth $2000
- January 28th: paid salaries amounting to $6000 via check cheque
- January 30th: deposited amount $10,000 into the bank account
- January 31st: Drew cheque amounting to $500 for petty cash
Using the above details, we can develop a cash book for the month of January and which would look like this:
What to Include in a Cash Book
A typical cash book will comprise of crucial details like
- The precise date of when the transaction transpired
- Recipient/delivery number for each item purchased
- A brief description of the specific transaction
- Present debit balance and credit balance
- Name of the recipient as well as the subsequent cash expenditure/revenue
- The tax rates applied
Best Practices When Creating a Cash Book
1. Ensure Excellent Recording of Entries
An excellent cash book should be properly documented. Basically, each and every transaction activity should be captured in the correct column. To contextualize this here is a brief guide on where each entry should appear.
- Cash receipts-cash column of the receipt side
- Discounts given-debit side
- Cash payments-credit side
- Received discount-credit side
2. Ensure Cleanliness Across the Document
Man is to error and when noting down your transactions, it is understandable that at some point you may make a wrong entry. Rather than making multiple cancellations which may end up making your cash book confusing, consider making a single cross on the specific entry.
3. All Entries Should be Dated on When Each Transaction Was Made.
Here is a sample form:
How to start:
Step 1: Create your account and create a new applet by selecting a customizable template.
- Set the applet as “Team-wide” if you want all team members to view each other’s records.
- Alternatively, you can allow each participant to view his/her own records only and stakeholders to view all entries.
- Invite guests with limited permissions, if needed.
- Set up reminders if you want your team members to receive automatic email reminders.
- Configure who will add records by choosing the “Participants” tab.
Step 2: Users will click the “Open Submission Form” button to fill it out and submit it.
Step 3: As soon as a new record is added, participants with “View” rights will receive an email notification and can view it in real time on the Timeline screen.
- Click “Edit” to change status or other relevant attributes.
- Employees can discuss records in real time — each record has its own section for live comments.
- Add an unlimited number of attachments (documents, images, photos, videos, audio notes, files) to a record.
- Export records or share them online.
Step 4: Get instant access to historical data and files with powerful search and filtering capabilities.
Step 5: The dashboard screen allows you to save time when you want to check a high-level overview, with quick one-click retrieval of the relevant information.