What is a cash book?
It can be simply defined as a book where all money transactions are recorded. Money transactions will include cash in as a result of a cash sale,deposit received, rent income etc or cash out like cash purchases, rent expenses, all bills payments etc.
The cash book has two sides i.e the debit (Dr) and the credit (Cr) side and this is where the cash in and cash out is recorded respectively. In each side there are different columns but a standard simple cash book will have four columns in each side. The columns are:
- Date: it records the date of the transaction. Each transaction is to be dated and the date corresponds with the document/voucher.
- Folio: This is the reference number to which payment or receipt is made for. For example if we are paying against invoice, then the folio number should be the check number we are using to pay.
- Description: this gives a brief phrase what the transaction is all about. Take for example we are receiving some cash out of a sale, then the description should be " cash sale"
- Amount: the last column is the amount column where amount of the transaction is posted. this is in the form of the local currency e.g. $
