Free Cash Book Template For Accountants

What is a Cash Book?

A cash book is a document that records all the money that comes in and goes out of a business. It is like a diary of your business’s cash flow.

The cash book is divided into two columns: Input and Output.

Input Column is used to record money that comes into the business, such as when you receive payment from a customer.
Output Column is used to record money that goes out of the business, such as when you pay for goods or services.

The cash book is a very important tool for businesses. It helps businesses to track their cash flow, identify trends, and make financial decisions.

Here are some of the benefits of using a cash book:

Improved cash flow management: The cash book can help businesses to track their cash flow and identify any potential problems.
Better financial reporting: The cash book can help businesses to prepare accurate financial statements, which can be used to make informed business decisions.
Reduced risk of fraud: The cash book can help to reduce the risk of fraud by providing a clear record of all cash transactions.

Accountants should note that transactions are recorded in chronological order in the cash book, i.e. as and when they occur.

Also, the cash book should be updated continuously, balance should be calculated, physically verified, and carried forward to the next day as closing balance.

It must not be confused with the cash account of your business, which is an account within the general ledger.

Features of Cash Book

Records all cash transactions: A cash book records all cash transactions, including receipts and payments. This includes cash received from sales, cash paid to suppliers, and cash withdrawals from the bank.
Records transactions in chronological order: Transactions are recorded in a cash book in chronological order, meaning they are recorded in the order in which they occur. This helps to track cash flow and to identify any missing items while reconciling.
Opening & Closing: Closing cash balance of any given day is physically verified and carried forward to the next day as the opening balance. This way, the chances of errors and frauds are minimized to a huge extent.
Has two columns: A cash book has two columns: a receipt column and a payment column. The receipt column is used to record all cash receipts, and the payment column is used to record all cash payments.
Has a running balance: A cash book has a running balance, which is the total amount of cash that is on hand at any given time. The running balance is calculated by adding up all of the receipts in opening balance and subtracting all of the payments.
Is updated daily: A cash book should be updated daily with all of the cash transactions that have occurred. This helps to ensure that the financial records are accurate and up-to-date.
Is helpful during the audit: Cash book helps a lot during the preparation financial statements, such as the balance sheet and the income statement. These statements provide a snapshot of the company’s financial health at a particular point in time.
Is a valuable tool for management: A cash book is a valuable tool for management. It can be used to track cash flow, identify trends in spending, and make informed decisions about the company’s financial future.
Can be used to detect fraud: A cash book can be used to detect fraud. If there are any discrepancies between the cash book and the bank statements, this could be a sign of fraud.
Is helpful for tax purposes: In Nepal, proper documentation is still a huge challenge for businesses and income tax authorities often penalize businesses for lack of proper record keeping of transactions. In these scenarios, cash flow can help a lot.

How a Cash Book works?

Lets understand the fundamentals and formatting of Cash Book from the example below:

You are an Accountant of ABC Supermarket Pvt Ltd. Among many other responsibilities, you are also required to maintain their cash day book. Yesterday’s closing cash balance was Rs 1,55,250. Below are the transactions for 15-02-2080. Kindly prepare the Cash Book for 15-02-2080.

S.N.	Transactions
1	ABC Supermarket (Hereinafter called as Company) received Rs 20000 from one it's debtors Angel Enterprises
2	Company pays Rs 5000 for electricity charge
3	Company pays Rs 10000 advance to Rameshwor (a senior employee)
4	Company pays Rs 15000 to Minimart Pvt Ltd
5	Company receives Rs 3000 from Kumar Acharya
6	Company receives Rs 20000 from it's owner (Mr Safal Nepali)
7	Company pays Rs 50 as courier charge
8	Company pays Rs 230 as cleaning expense
9	Company receives Rs 550 as scrap sales from office wastage

Difference between cash book and day book

Many accountants think that cash book and day book are the same reports, but that’s not correct.

A daybook is mostly used in a manual accounting which shows each and every transactions that occur during a day, be it a purchase, sales, receipt or payment. Similar format of daybook can also be exported from Tally Prime.

But on the other hand cash book record only the cash transactions during any given day, i.e. only receipts and payments. Large businesses usually maintain cash book as a petty cash account to track trivial receipts and payments in the business.

Difference between cash book and cash account

A cash book is a record of all cash transactions of the business, whereas the cash account is one of the general ledger.

Similarly cash transactions are posted directly into the cash book, but in case of cash account, first the transactions have to be posted as journal voucher and then only in cash account.

Most of the businesses prefer cash book over cash account because it provides information regarding the cash balance in the real time, it is also easy to prepare and understand.

But, cash accounts are integral part of financial reporting, which means preparation of balance sheet can not be carried out without proper cash account.

How to use Free Cash Book Template by Khata Business Academy

Khata Business Academy provides you with the free cash flow template which can easily be downloaded in Excel format and be used in your day to day cash tracking. It can be kept online or be printed as a part of your business documentation. You can utilize the free cash book template in following manner: