Legal Definitions - cash book

A cash book is a fundamental financial record used by businesses to meticulously track every instance of cash coming into the business (receipts) and every instance of cash leaving the business (payments). It serves as a detailed, chronological ledger for all cash transactions, providing a clear picture of the business's immediate cash flow.

Here are some examples to illustrate how a cash book is used:

• Example 1: A Local Bakery

  The owner of a small neighborhood bakery uses a cash book to manage daily finances. Every morning, they record the cash received from customers purchasing bread, pastries, and coffee. Throughout the day, they also log any cash payments made, such as reimbursing an employee for buying emergency flour from a local grocery store or paying a delivery person for a special ingredient. This cash book helps the owner track their daily cash sales and expenditures, ensuring they know exactly how much physical money the business has on hand at any given moment.

• Example 2: A Community Garden Project

  A non-profit community garden project maintains a cash book to manage its operational funds. When members pay their annual cash dues or when the garden sells surplus vegetables at a local market for cash, these amounts are recorded as receipts in the cash book. Conversely, any cash payments made for items like new gardening tools, seeds, or a small stipend for a guest speaker are logged as payments. This system ensures accountability for all physical money handled by the project, which is vital for transparency with its members and donors.

• Example 3: An Independent Mobile Mechanic

  An independent mobile mechanic, who travels to clients' homes, uses a cash book to keep track of their immediate business transactions. When a client pays in cash for a car repair service, the mechanic records this as a cash receipt. Similarly, if the mechanic pays cash for a specific car part at an auto supply store or for fuel for their service van, these expenditures are entered into the cash book. This helps the mechanic monitor their cash flow on the go, ensuring they have enough funds for immediate operational needs and accurate records for tax purposes.