ABSTRACT

A cash book can be defined as a financial journal which contains all the cash receipts and
disbursements. Cash Book also includes bank deposits and bank withdrawals. The entries that
come in the cash book are then posted into the general ledger. In the cash book entries, the
daily cash receipts and cash payments are easily and smoothly analysed. The Cash in hand at
any point of time can be easily ascertained through the Cash Book balance. Also, any mistake
in the book can be easily detected at the time of verification of the cash. Any defalcation of
money from the business can even be detected while verifying cash book. A cash book is said
to be a set up of the subsidiary to the general ledger, where all the cash transactions are made
during an accounting period. The cash recordings are recorded in a chronological manner.
Larger business concerns generally divide the cash book into two parts.   The cash
disbursements journal – Cash Disbursement Journal records all the cash payments and the
cash receipts journal, which helps in recording the cash received into the business. The cash
disbursement journal consists of such items as payments payable to vendors, which is done to
reduce the accounts payable. The cash receipts journal consists of the payments that are made
by the customers on the outstanding accounts receivable or the cash sales. The prior goal of a
cash book is to manage the cash efficiently, it is easy to determine the cash balances at any
point which will allow the managers and the company accountants to budget the business’s
cash effectively when the need comes. This is much faster to access the cash information in a
cashbook than by following the cash through a ledger.