Chronological accounting record for cash and bank receipts and payments that functions as both a book of original entry and a running cash ledger.
A cash book is a chronological accounting record of cash and bank transactions. It captures receipts, payments, and running balances, and in many systems it acts both as a book of original entry and as a ledger for cash and bank activity.
Cash is highly exposed to error, misuse, and timing differences. A well-maintained cash book helps accountants track daily money movement, support reconciliation, and keep the recorded cash balance aligned with supporting evidence.
Each entry in the cash book records the date, description, and amount of money received or paid. Some businesses keep only cash and bank columns, while others also include discount columns. The exact layout varies, but the accounting purpose stays the same: record cash movement promptly and preserve a usable running balance.
| Cash Book Variant | What It Usually Tracks | When It Is Useful |
|---|---|---|
| Single-column cash book | Cash only | Very simple cash activity |
| Two-column cash book | Cash and bank | Businesses that separate physical cash from bank movement |
| Three-column cash book | Cash, bank, and discounts | Businesses that also track discount effects in the same book |
After entries are posted, accountants compare the bank portion of the cash book to the bank statement and investigate differences such as deposits in transit, outstanding checks, bank fees, or NSF items.
Assume a business starts the day with 8,500 in the bank portion of its cash book, receives 2,000 from a customer, and later pays 750 to a supplier.
| Date | Detail | Receipts | Payments | Running Balance |
|---|---|---|---|---|
| Opening balance | Balance brought forward | 8,500 | ||
| Apr 20 | Customer receipt | 2,000 | 10,500 | |
| Apr 20 | Supplier payment | 750 | 9,750 |
If the bank statement later shows a different balance, the difference is resolved through bank reconciliation rather than by guessing the balance.
A cash book is not the same thing as the cash flow statement. The cash book is a detailed record of transactions, while the cash flow statement is a summarized financial report. It is also not always limited to physical cash, because many accounting systems use the cash book to track both cash-on-hand and bank activity.