Cash book is very essential to any business. It is very important as it shows the flow of finances of the company. Cash book talks about the profit and loss statements of the company. It forms the basis of accounting of the business. They can be of many types, it is up to the businesses to create their own and maintain it simple. It can be a simple cash book, but it is the most crucial book. It should have every single detail of the money that goes out and comes in into the business. Cash books need to be updated every single day and one needs to re check this book to check the totals.
Q. Do you have a complicated cash book?
Q. Are you looking for a simple cash book?
Q. Don’t know how to prepare a cash book?
Here are some tips from Kuza Biashara, on how to keep a simple cash book:
List the money you have
The first list in the cash book should be of your finances. In this one should make a note of all the money you have invested in the business and have in your bank accounts. Write in separate columns like – Money Invested and Money in the Bank or Savings. This list should be very clear and it should be updated regularly to avoid confusion later. Do not round up the figures as it can create problems in accounting. The perfect numbers need to be entered.
Cash Coming In
The next list in your cash book should be about the cash or money coming in to your business. The money you earn through sales need to be noted down in this column. Also make a note of the way you receive the amount, if it’s through cash or cheque. Make a note of the cheque number if you receive money through cheques. Clearly write the amount you receive on daily basis also with the dates mentioned. Writing the dates and cheque numbers will reduce chances of misplacing the money in the business. One cannot cheat another person in financial matters.
Cash flowing out
The next thing you need to maintain is the cash book and the cash that is flowing out of your business. This could be the money you give your landlord as rent, salaries of your employees, to buy your materials and for other purposes to produce your products and services. Even a small amount of money you spend should be written in your cash book. The money you send out also should be accompanied by the date, cheque numbers if applicable and also the name of the person. Re-check the details you enter in the book and also the totals.
A unique way to keep the transactions is by keeping a soft copy and a hard copy of the cash book. Many software’s have been developed which has made the work easy for the entry. It is an important tool for management. Traditional style of cash book has always been safe when compared to software’s.