Importance of Cash Book

Welcome to today’s class!!

We are thrilled to have you in our class!!

In today’s Store Management class, we will be learning about Cash book 

Importance of Cash Book 

 

importance of a cash book

One of the simplest ways to tell what a Cash Book is goes this:

A Cash Book is a financial newspaper which includes all cash receipts and disbursements, including bank deposits and withdrawals. After that, entries in the cash book are added to the general ledger.

Easy, right?

In understanding the importance of  cash book, we must know that a Cash Book is the one in which all the cash receipts and cash payments, including the funds deposited in the bank and funds withdrawn from the bank, are recorded according to the date of the transaction. All the transactions recorded in the cash book have two sides, which includes, debit and credit.

The difference between the sum of balances of the debit and credit sides shows the cash balance on hand or bank account. Cash Book plays a dual role as it is the book of the original entry of the company and the book of the final entry.

Also, in talking about the importance of cash book, Cash Book is a separate book of accounts in which all the company’s cash transactions are entered concerning the corresponding date, and it is different from the cash account where posting is done from the journal. There is no requirement to transfer the balances to the general ledger, which is required in the case of the cash account. Entries are then posted to the corresponding general ledger.

In Accounting, a Cash Book has two sides, and they are: the left-hand side and the right-hand side, where all the receipts in cash are recorded on the left side, whereas all the payments in cash are recorded on the right side. Therefore, a Cash Book helps in effective cash management as management can know the balances of cash and bank and take the necessary decisions accordingly.

In summary, a Cash Book is the one in which all the cash receipts and cash payments, including the funds deposited in the bank and funds withdrawn from the bank, are recorded according to the date of the transaction.

 

Evaluation

What is a Cash Book?

 

Reading Assignment

How many sides are there in a Cash Book?

 

Weekend Assignment

Explain the following and their uses in a Cash Book

  • Debit side
  • Credit side

We hope you enjoyed today’s class. In our next class, we will be talking about the  Double Column Cash Book.

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