Category: Cash

Cash Book Format

We are listening many times terms like "cash" and "money" in any business and shops. because all trading transactions are on cash flow and it is the base of any business with format of in bank or in hand. So that, a successful business should keep its cash transactions very clear with true format in a cash book for decision times to get more profits. so that, understanding cash book format is a most for cash flow reports.


Parts of Cash book

All accounting transactions should be recorded and keep in a suitable section in ledger book, there many types of transactions between products, customers and suppliers. so that, relations of these transaction will be by cash or credits. Transactions of items of products and services will be kept in sales day book and purchase book and therefore all money transactions will keep in cash book. so any cash payment and cash receipt will record in cash book.

Cash book is a separate accounting book that includes columns as:

  • Date
  • Accounts
  • Description
  • Debit
  • Credit

Any record with debit amount means cash amount will store in cash account and reverse.


Typically, we can find two format for a cash book

  1. Official Format

  2. Shop Format

Official format of Cash Book

Official format of Cash Book

In official format there are columns Date, Description, Debit and Credit but in shop format there are columns: Date, Description, Income and Expense.

Shop format of Cash Book

Shop format of cash book

Debit and Credit are used in accounting concepts and professional format but these terms are hard to understand for normal user so in shop format term Income will used for Debit and Expense Will used for Credit.

Types of Cash Book

  • Two Column Cash Book
    • This type, has two columns as Debit (Income) and Credit(Expense) for Only Cash account so it mentions to All money in hand and bank
  • Triple Column Cash Book
    • This type, has three columns as Debit, Credit, and a column for cash type ( cash in hand or cash in bank). Benefit of this type of cash book is to recognize where is cash? in hand or in bank and we can have more clear reports and statement of cash flow
Cash Book in Triple Column

Cash Book in Triple Column

Petty Cash Book

Petty cash is one of big volume account in any business because of much quantity of charge payments for daily charges of offices or..

However, in the most company, petty cash transactions keep in separate book as name petty cash book.


How to Use Cash Book

As you know, cash transactions are too much and everyday too many voucher will be recorded. so it is recommended to enter cash payments and cash receipt at the end of day and before leaving the job. Don't leave them to do in the next day because you will get more delay vouchers day by day so that will grow to huge quantity of vouchers and it will make more mistakes in big time working.

To read more:



Notes Receivable

For accounting purposes, the term notes receivable refers to promissory notes, bills of exchange or trade acceptances. Notes receivable are distinguished by the fact that they are written contractual arrangements for the payment of a specific amount of money, generally plus interest, at a stated time. They are usually negotiable or transferable instruments which enable the holder to use them for cash generation in much the same way as is done with accounts receivable.

( A note is generally recorded at its face value.)

However, when no interest rate is specified, the face amount of a note is assumed to include some provision for interest. Such non-bearing notes are recorded at face value less an interest charge based on a percentage that is assumed to be reasonable.
The Discount on Notes Receivable is taken into income over the life of the note.



Discounting Notes Receivable

Notes receivable may be sold or discounted. When a note is sold to a bank or finance company without recourse, the seller assumes no future liability should the maker of the note default. Discounting, on the other hand, is usually done on a recourse basis (i.e., money is borrowed using the note as collateral and the borrower, who endorses the note, becomes contingently liable should the maker default).

The proceeds or cash received when a note is discounted may be computed in one of two ways:

  1.  The interest or discount charged by the lender is deducted from the face value of the note
  2.  The discount rate may be applied to the maturity value of the note.

Cash Account

The First question is: "what is Cash". before to answer it, we should have a define of word "Cash". Cash in public area as shops and stores will be mentioned to money but in finance cash term covers any capital in hand, cashier and bank account that you could have to spend same day of request. Cash is king. It is the essential part of business so cash book is a strong matter in financial reports and without it, a business cannot pay its employees' wages or pay for goods or services. Cash book entry is recording cash in the bank account from the bank. Small businesses may sometimes prepare a cash flow statement directly for auditing. More usually, however, the cash flow statement is by deducing the figures from the profit and loss account and balance sheet.



Cash Flow Schematic

Cash Flow Schematic

Cash flow Statement

At its simplest, records the cash inflows and cash outflows classified under certain headings such as cash flows from operating(i.e., trading) activities. All companies(except small ones) must prepare cash elements in line with financial reporting regulations.



Importance of Cash Book

However some sole traders, partnerships and smaller companies also provide them, often at the request of their bank. As Real-Life shows, banks aware of the importance of cash As well as preparing cash flow statements on the basis of past cash flows, businesses will continually monitor their day-to-day cash inflows and outflows. at the end of financial period, for information of shareholders, capital of company will be reported in a cash book, so it is very important to have clear copy of it every time!.

Managers also prepare cash budgets which look to the future. These are generally used within the business and are not pub- listed externally. Cash management, therefore, concerns the past, present and future activities of a business.

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