Cashbook is very useful for small businesses like small grocery retail shops, restaurants, bars, and other small business enterprises (SMEs) that often need small quantities of easily available purchases to avoid unpredictable shortages of products in their shop.
What Is A Cashbook
A Cashbook also referred to as a cash log is a ledger that is used to keep track of small cash purchases. Big companies like Shoprite, usually don’t use their cashbooks often because they don’t frequently make small purchases like small business enterprises (SMEs) do.
Cashbook helps businesses to keep track of small cash transactions like small purchases or cash expenses that could easily get missing. It is very important for every business be it micro, small, medium, or large enterprises to adopt a cash book as a part of their Petty Cash fund.
A petty cash fund is a small amount of cash kept on hand to pay for small purchases or minor expenses such as generator fueling, transport expenses, and reimbursement. Some micro and small businesses might not accept check or debit card payments. So it is necessary to pay them from petty cash funds when buying from them.
How to Prepare Cash Book
Here is how to establish a cash book for your small business. You should first open the cash book with the sum of money that you want to use to start your petty cash fund, and then add every other cash that you receive either from sales or withdrawal from the bank, and then subtract the amount of each cash payment that you made, either purchase, expenses or deposit to the bank the balance is your petty cash fund or your cash at hand.
When you exhaust the amount in your petty cash fund, add more money, and note the amount you have added in your petty cash book. Periodically reconcile the account by making sure that the petty cash fund recorded in the cash book matches the actual cash in hand.
Your cashbook should be a record of legitimate transactions that are made within the business, not personal expenses. You will also need to periodically daily, weekly, or monthly move the record of these transactions to your general ledger.
Learn more about general ledgers here https://blog.tracepos.net/what-is-a-general-ledger/ Journal entries are a great way to record cash deposits or payments that are not part of your day-to-day business. It is an easy way to get your business records in order and keep them that way.
It is much easier to have a journal entry record a cash deposit than it is to have to record a cash deposit in every single account in your business. Instead, you can record all of your cash deposits in a journal entry format and then post that journal entry to the proper ledger account in your accounting software.
Small businesses are the backbone of the economy. Small businesses are the main source of employment for the majority of the population and also provide goods and services to the larger businesses as well.
Cashbook is a very useful tool for small businesses like small grocery retail shops, restaurants, bars, and other small business enterprises (SMEs) that often need small quantities of easily available purchases to avoid unpredictable shortages of products in their shop.
Record cash deposits using Tracepos cloud business management and accounting software’s “journal entries” feature to keep your company’s records up to date and correct.
TRACEPOS is a cloud-based business management and accounting app for small businesses that will help you keep your books up to date, even when you’re not around. It’s a great tool to manage your business, whether it’s a small business or a large corporation.
The journal entries feature of Tracepos is a fantastic tool that allows you to make adjustments to your cash flow. You can record cash deposits or cash withdrawals, or you can simply adjust your bank balance. It’s as easy as 1,2,3!
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PS: Petty cash fund should not be large amounts. avoid using petty cash funds to make purchases or expenses of large amounts.