Uses of Cash Books in Accounting

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;

-Date
-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.

Source by Odongo Okungu

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