What is a Cashbook
In the simplest terms, a cashbook can be referred to as a basic form of accounting book. Basic information about payments and cash receipts are included in a cashbook. The concept of cashbook is quite old. In the early days and until the growth of technology and computing systems, the cashbooks were maintained as hard copy only. But, as soon as the various accounting software came into fore, the cashbooks were made an integral part of it. Various accounting software have different name for the cashbooks. But the basic concept is same as earlier.
The cashbook concept has been largely used in a lot of money management software in the recent times. Any layman can understand a cashbook. This is the main reason behind the popularity of this. If you want to keep track of how much money has gone out from your business and how much have come, then a quick reading of the cashbook is more than enough. For smaller businesses, a cashbook is very vital. So, it is necessary that the cashbook is being maintained by a trustworthy person. Otherwise, the owner might face huge financial losses in the future. Moreover, though large businesses have more sophisticated accounting software, still the cashbook is of great importance for them too. This is so because it forms the foundation of any kind of financial and business recordkeeping. It’s like the first floor of a multi-storied building.
Multiple columns are created in a cashbook so that the end user can add a lot of information about various transactions. The more information is entered into the cashbook, the more it becomes easier for the reader or the senior executives or the business owner. Still, the basic info of a cashbook include a serial number, the date of transaction, the amount in transaction, the origin or source of the money and to which head or account the money is going including the running balance of the account.
In an accounting software the column and heads are created in advance. The end user is just required to enter the details in a computer when needed. It’s easier to keep track of a soft copy of a cashbook compared to a hard copy.
A lot of businesses have devised a unique way to keep track of their transactions. They combine both hard and soft copy of the cashbook. A hard cashbook is used during the business hours which are later converted to a soft copy. Some business houses use a real-time software or mechanism which allows the end user to enter the hard copy information to software almost instantaneously.
At times, the cashbook turns out to be a very potent tool of management. The concept of involving the cashbook in managerial decisions is fast becoming popular in the modern corporate worlds too.