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What is a Cash Book?

Frequently Asked Questions About Small Business Accounting

Source:

Often, new franchise owners get into the franchise game with no real understanding or knowledge of the basic accounting essential to running a business. Here we demystify the common olí cash bookÖ

Your Basic Cash Book

The cash book can be described as the basic building block of accounting. Itís simply a book in which receipts and payments of money are recorded, in chronological order. Originally a hard copy book (still available at stationersí shops), cash books are now more usually recorded in spreadsheets, as part of accounting or bookkeeping software packages. The left-hand side of the page is dedicated to Income (all money into your bank account, plus interest earned), and the right-hand side to Expenditure (all the money out your bank account, including bank charges). The Income side is also referred to as the Debit side, and the Expenditure side as Credit.

Balancing Your Cash Book

At the end of the month, youíll add up the Income (Debit) and Expenditure (Credit) sides. This month-end balance will become your balance for the next month, and so it goes. Remember, your cash book balance should be the same as the balance in your bank account. Also remember to keep precise records of the money you collect and that which you spend for your bookkeeper, accountant and/or auditor.

 
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