A cashbook can be regarded as the basic building block of a business accounting system. Learning how to keep a simple manual cashbook is within everyone’s grasp. This guide explains how you can set up and maintain a simple manual cashbook, and the benefits you gain from a cashbook, such as analysing your income and expenditure and working out your GST returns.
There are many types of cashbook systems that you can use - manual and electronic. The most important feature to look for is a system that is easy to use, easy for you to see at a glance what is happening, and does not take up too much of your time.
The manual cashbook example explained here is a guide only, and shows just a few entries, but understanding its operation will give you a basic grasp of how all cashbooks operate. Even if you later move on to a computerised cashbook, this basic understanding will stand you in good stead.
As you read through this guide, have the cashbook example (printed in landscape, not in portrait like this article) in front of you. Our cashbook features a running bank balance and a business record in one.
Some businesses have three cashbooks (cash payments, cash receipts and bank balance), yet you may find it easier to use this system (you can tailor it to suit your particular business).
The cashbook is divided into three parts:
- Columns 1-6: show details of what has happened in the business, and provide an up-to-date bank balance.
- Columns 7-8: show the money that has come in.
- Columns 9-17: analyse the money that has gone out of the business.
The important principle is that you enter all money figures TWICE—once in columns 4 OR 5, as money IN or OUT of the business, and again in one of the analysis columns (7-8 or 9-17), showing what that money was spent on.