Use of cash books in accounting
So what are cash books used for? In accounting, they are used to record both cash transactions received by the business and cash paid out by the business. There are two sides; The debit side and the credit side. Each side of the cash book in accounting has columns for;
-Date
– Especially; where you save the products.
-Bank; This is where you record payments made by checks and the receipt of checks.
-Cash; This is the column where you should record cash received and paid out.
Debit side; This is used to record all cash received, then posted to the cash column in the cash book. For example, if you made cash sales of $80,000 worth of goods, this would be recorded on the debit side of the cash book. The debit side is also used to record checks received by the business ie. if a customer pays for goods with a check for $120,000, then this is recorded on the debit side of the bank column.
Credit side; The credit side is used to record cash and checks paid by the business. For example, if your fuel costs about $100 and is used up in one day, it will be credited or recorded on the credit side of the cash book. However, if the supplies were paid for by a check for $200,000, then this is recorded in the Bank column on the credit side of the cash book. So what is the importance of the cash book in accounting? You may ask. Okay…
1. It helps the business in capturing all the payments and receipts for a particular month or duration.
2. Used to reconcile bank statements.
3. It can be used as a reference in accounting during an audit, hence it gives evidence that goes a long way in guiding the auditors while going through your books of accounts.
#cash #books #accounting