cash journal

Cash journals are an important tool of record keeping. The use of cash journals helps in determining the cash balance of a business at any given time. In its simplest form, a cash journal is a record of all cash receipts and payments made. It typically includes the date of the transaction, the cash amount, and a description of the purpose of the transaction.

Cash journals are usually used to record both revenue-increasing transactions as well as expense-increasing transactions. Examples of revenue-increasing transactions might include sales of goods or services and receipt of payments from customers. Examples of expense-increasing transactions might include the payment of wages or the purchase of supplies. Additionally, cash journals can also be used to record non-cash transactions such as those involving non-cash payments (e.g., unpaid bills) or deposits (e.g., money transfers).

The purpose of the cash journal is to facilitate the accurate recording and tracking of cash transactions. By providing this information to business owners and managers, the cash journal helps to ensure that the most up-to-date and accurate financial data are available on a day-to-day basis. This, in turn, helps to promote better financial decision making, as it enables business owners and managers to make more informed decisions regarding how and when to spend, invest, or save money.

In terms of its format, the cash journal can take various forms. It is commonly divided into a number of columns or categories, such as date, description, payment, and receipts. The description should provide a detailed description of what the transaction was for, such as payment for office supplies or payment for salary. The payment and receipt columns should serve to document the exact cash amount for the respective transaction.

The accuracy and completeness of a cash journal is extremely important. It is important to take the time to make sure that all necessary details are recorded accurately, as this will help to ensure that the financial records remain accurate and up-to-date. Furthermore, it is important to ensure that all documentation related to each transaction is kept close by and easily accessible, as this can help to clarify any discrepancies or questions that may arise in the future.

Overall, the cash journal is an important tool for keeping accurate and up-to-date financial records. By ensuring that all cash transactions are accurately documented, the cash journal helps to ensure that the financial position of a business is both clear and accurate. This, in turn, helps to support informed financial decision making.

Cash Book is a financial document, which is used to record all cash and cash equivalent transactions of a business organization. It includes cash received, cash paid and bank transactions.

Cash Book is kept in the form of a double entry bookkeeping system. It is headed with the name of business, date and particulars. In the left column, cash and cash equivalent transactions are entered as debits, while in the right column, these transactions are entered as credits.

In the case of cash received, the amount is first recorded in the left column under Debit head and then it is transferred to the right side of the cash book under Credit head.

Similarly, in the case of cash payments, the amount is first entered under Credit head and then transferred to the right side of the cash book under Debit head.

Cash Book also records all bank transactions such as debit/credit made to a companys bank account, depositing of cheques into the account, vouchers received/paid for bank charges, payment/receipt of interest in the companys bank account, etc.

A Cash Book is generally balanced on a daily basis and results of this process help in maintaining an up-to-date record of cash and cash equivalents flowing into and out of a business organization. The main benefit of Cash Book is that it helps in the preparation of financial statements such as balance sheet and income statement which helps management in decision-making.