What Is a Cash Book?
A cash book is a financial journal that contains all cash receipts and disbursements, including bank deposits and withdrawals. This is the main area where businesses record any and all cash-related information. Entries are normally divided into cash payments and receipts. All of these are posted in the company’s general ledger.
- A cash book is a subsidiary of the general ledger in which all cash transactions during a period are recorded.
- The cash book is recorded in chronological order, and the balance is updated and verified on a continuous basis.
- Larger organizations usually divide the cash book into two parts: the cash disbursement journal and the cash receipts journal.
- A cash book differs from a cash account in that it is a separate ledger in which cash transactions are recorded, whereas a cash account is an account within a general ledger.
- There are three common types of cash books: single column, double column, and triple column.
How a Cash Book Works
A cash book is set up as a subsidiary to the general ledger in which all cash transactions made during an accounting period are recorded in chronological order.