So what are cashbooks used for? In accounting they are used to record both cash transactions received by the business and cash paid out by the business. It has two sides; The debt side and the credit side. Each side of the cash book in accounting has columns for;
-Particular; Where you record the products.
-Bank; This is where you record payments made by checks and receipt of checks.
-Cash; This is the column where you should record cash received and cash paid out.
Debit side; This is used to record any cash received after which it is posted in the cash column in the cash book. For example if you made sales on a cash basis of goods worth $ 80,000, then this will be recorded on the debit side on the cash book. The debit side is also used to record checks received by the business ie if a customer pays for goods by cheque worth $ 120,000, then this is recorded on the debit side on the bank column.
Credit side; The credit side is used to record cash and checks paid for by the business. For example if your fuel costs about 100 $ and is used up in a day, then it will be credited or written on the credit side of the cash book.However if the supplies are paid for using a cheque worth 200,000 $ then it is recorded On the Bank column of the credit side of the cash book. So what is the importance of a cashbook in accounting anyway? You may ask. Well …
1. It helps the business in capturing all the payment and receipt for a particular month or duration.
2. It is used to reconcile Bank statements.
3. It can be used as a reference in accounting during auditing because it gives evidence that goes a long way in directing the auditors while they are going through your books of account.