How to Maintain a Cash Book

Posted by: Patricia Barlow Post Date: 11th December 2015

Regardless of the size of a business or the industry it’s in, it will need to record the cash that comes in and goes out. This is recorded in the cash book, which is a book of prime entry.

The cash book layout

Payments

The cash book will have two purposes. One is to record the money that comes into the business, and the other is to record the cash that goes out.

How to maintain a cash book

The payments side of the cash book will have separate analysis columns in which to record details of each payment.

DateDetailSupplier refAmountPurchase ledgerVATPurchasesOffice costs
30/09100215£120£20£100
30/09BACSYH43£1000£1000

 

The first four columns are completed as follows:

Date: the date the payment was made.

Detail: the cheque number or BACS detail.

Supplier ref: this will be completed if paying off an invoice recorded in the purchase ledger.

Amount: the amount leaving the bank account.

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These columns will be completed with the net amount of the receipt. All receipts will be used to total the receipts side of the cash book at the end of the financial period.

The cash book must record all monies coming in and going out of the business, and will be reconciled to the bank statement on a regular basis to check that all of the payments and receipts are being recorded accurately.

Understanding how to maintain a cash book is covered in more depth on our accounting courses, including AAT.

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