Maintaining The Cash Book Flashcards
What are the two main columns in the cash book, both debit and credit side?
Cash and Bank
What is a Cash Book?
Allows business to record all transactions properly which enables them to have control over them.
Also allows transfers between the two to be transparent.
What is the cash book debit side?
Debit side - Used to record receipts into the business.
What kind of figure is in the bank and cash column of the cash books?
The figure in the bank and cash column is the GROSS total.
Why is the VAT only recorded on cash sales or purchases?
VAT is only recorded on cash or sales purchases because on credit sales or purchases the VAT will have already been recorded when the original sales invoice was entered into the SALES DAYBOOK.
What does casting mean?
Casting is the process of totalling of the all the columns in the cash book
When cross casting the cash book what must happen to the balance brought forward?
When CASTING the balance brought forward MUST be included in the table.
However when CROSS-CASTING the balance brought forward must be deducted from the final total to avoid any duplications.
How can the business calculate how much cash it has in hand and in the bank?
Total cash or bank balance from debit side - total cash or bank balance from credit side.
Money IN - Money OUT.
What does a positive or negative bank balance mean? Why is the cash balance different?
Positive bank balance is a business asset however a negative bank balance means the business has a liability meaning it owes money.
The Cash balance is different has you cant have negative cash as its only notes and coins.
How are the cash and bank columns recorded if the cash book is a prime book of entry only?
The totals of the cash and bank columns will NEED to be posted to the cash account and the bank account in the general ledger.
How are the debit and credit entries recorded if both the cash book is a prime book of entry and part of the general ledger?
There is no need to post debit and credit entries from the cash and bank columns to the general ledger.
There are no separate cash or bank accounts in the general ledger.
HOWEVER the analysis columns are posted as normal to the general ledger.
