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The cash book

A reminder of cash books before we cover them in detail.

Watch the video to hear the Kaplan tutor show us the cash books again. We will consider them in detail here. Understanding the workings of the cashbook is important before we think any further about this control.

As mentioned in the video, some businesses maintain a combined cash book (showing both cash receipts and payments) and some a separate cash receipts book and a separate cash payments book.

In a combined cash book, the difference between the total receipts and payments will result in the overall cash balance at the end of the period.

Where separate cash receipts book and cash payment books are maintained, we will need to do a little working to find the overall balance on the cash book.

The working will look a bit like this:

Opening balance per the cash book X
Add: Receipts in the period X
Less: Payments in the period (X)
Closing balance per the cash book X

Please remember:

  • If cash inflows > cash outflows = positive cash balance
  • If cash inflows < cash outflows = negative cash balance

We know this as an overdrawn balance (although I hope it’s not too familiar to you!)

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Controls within an Accounting System

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