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Cashbook

In this document you can find out everything about having a cashbook, including a template that you can use.

What is a cashbook?
A cashbook is a simple accounting tool that is a reliable method of recording basic information of all financial cash transactions. It is an easy tool that allows you to know how much money is coming in and what bills are getting paid.

The importance of a cashbook
By using a cashbook you know exactly how much cash your entity has and where you have spent your cash on. The cashbook should be a record of transactions that are legitimate business expenses and, thus, in order to expense them you need to transfer the records of these transactions to your general ledger (accounting software). Furthermore, the cashbook is useful for your accounting, because it allows you to record all cash payments systematically and provides information about cash management more easily. Moreover, your cashbook is supposed to be part of your entity’s petty cash fund. Petty cash fund is the amount of money that is reserved for purchases that are not expensive and that are not convenient to make by using a credit card.

How to use the cashbook
All the headlines do speak for themselves: LC, Name, Month (/quarter/week, depends how often you want to record everything) and page. In order to start working with your cashbook you write down your petty cash fund on opening balance: this is the amount of cash where you start with. When you used your entire petty cash find, you need to add more money by withdrawing from your bank account and transferring to your petty cash fund, while noting this transaction in your banking ledger. Make sure that you use appropriate categories in the description field.
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