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Post Info TOPIC: cash book -help needed


Senior Member

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cash book -help needed


Hi guys

I would like to ask you for help cause I have trouble to understand cash book and necessity of having one. Let's say you own a shop with bicycles. There are customers who use their debit bank cards to pay for bicycles they buy. Since there are people who pay with their bank card,  money is immediately transferred to shop owner's bank account so you can call this transaction cash sale. Money inflow from this transaction will be included on your bank statement. Why do you need to record this transaction in cashbook  if you already have bank statement and this transaction is recorded on your bank statement ?
Why this transaction must be recorded twice, once in cashbook and once in bank statement? Regards. Rafal



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Master Book-keeper

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rafapak wrote:

Hi guys and gals

  money is immediately transferred to shop owner's bank account 


No, it's not immediate.  Funds can take up to a week to be transferred. you might have 10 people paying on a card in one day, and when the funds hit the bank it will be a lump sum.

For control purposes.

Re visit the topic notes at level 2.



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Joanne  

Fallows Hall Ltd 

Winner - Bookkeeper of the Year 2015, 2016 and 2017

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

 



Senior Member

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thanks Joanne for reply . You are right. Anyway, transaction will be included on bank statement sooner or later. Since this transaction will be included in bank statement why do we have to include this transaction in cashbook again ? Why this transaction has to be included in cashbook after it was recorded on bank statement ?

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Master Book-keeper

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It's not recorded in the cash account after, it's done first. 

Although most 'cash books' incorporate cash and bank.  



-- Edited by Cheshire on Tuesday 4th of February 2020 10:38:46 PM

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Joanne  

Fallows Hall Ltd 

Winner - Bookkeeper of the Year 2015, 2016 and 2017

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

 



Senior Member

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thanks Joanne for reply. What document served as a basis for recording this transaction in cashbook  ? They must have a document that reflects this transaction before they record this transaction in cashbook. Could this be cash register tape ?



-- Edited by rafapak on Tuesday 4th of February 2020 11:05:41 PM

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www.aatcomment.org.uk/audience/students/understanding-the-cash-book-level-2-processing-bookkeeping-transactions-study-tips/

www.aatcomment.org.uk/audience/students/posting-the-cash-book-level-2-processing-bookkeeping-transactions-study-tips/

As I said at the top 10 customer pay by card - you have a card receipt from each customer
Then at end of the day (if staff remember) they will do a summary print from the card machine - this should agree with the card totals per the 10 above
Then you might also have a 'z' list from your till which will have the total taken by card - this should also agree to the above two.

In practice - the card payments might be taken from customers on a Monday, but the entry on the Bank will be the lump sum on the following day or the following Monday - depending on who the card merchant provider is. You may or may not have to allocate the payments on a card by card basis to an individual debtor account or they may be just 'cash' purchases - depends on teh nature of the business. Easier in practice to process through to cash account (Im talking software generally now) daily and then transfer from cash account to bank when the bulk payment is made. TREAT as if its cash for your exercise purposes

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Joanne  

Fallows Hall Ltd 

Winner - Bookkeeper of the Year 2015, 2016 and 2017

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

 



Senior Member

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thanks Joanne for detailed explanation. It is stated in the article that cash column of cash book is for bank transactions that have been paid with cash-notes and coins. I wonder what  example of such transaction might be like.  Let's say you go to the bank and you tell a women who is sitting at the bank window that you want to withdraw some money but only coins. She gives you those coins, you go to a supermarket where you buy materials and pay with coins. Do you think this is good example of transaction that qualifies for recording in cash book in cash column ?


-- Edited by rafapak on Wednesday 5th of February 2020 01:11:43 AM



-- Edited by rafapak on Wednesday 5th of February 2020 01:55:46 AM



-- Edited by rafapak on Wednesday 5th of February 2020 03:00:49 AM

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Master Book-keeper

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Posts: 8290
Date:

rafapak wrote:

thanks Joanne for detailed explanation. It is stated in the article that cash column of cash book is for bank transactions that have been paid with cash-notes and coins. I wonder what  example of such transaction might be like.  Let's say you go to the bank and you tell a women who is sitting at the bank window that you want to withdraw some money but only coins. She gives you those coins, you go to a supermarket where you buy materials and pay with coins. Do you think this is good example of transaction that qualifies for recording in cash book in cash column ?


-- Edited by rafapak on Wednesday 5th of February 2020 01:11:43 AM



-- Edited by rafapak on Wednesday 5th of February 2020 01:55:46 AM



-- Edited by rafapak on Wednesday 5th of February 2020 03:00:49 AM


I got your email Rafal.

I had read your original response after you had done it, so the edits you had done didnt flag up as an extra or unread post.  I would suggest you only use edits to correct a spelling error and never if more than 5-10 minutes has passed or someone has already responded, that way nothing gets missed.   So with your additional question, just adding to a new box in the same post would have flagged it up to everyone.



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Joanne  

Fallows Hall Ltd 

Winner - Bookkeeper of the Year 2015, 2016 and 2017

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

 



Master Book-keeper

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Anyway...
to illustrate the point and also answer the question...

If you are stuck just revert to doing individual T accounts (for anything, ever in accountancy...mostly). Even if you only know one half of the transaction that will often prompt the second half.

Remember also that your cash book is a massive t-account.

So - cash (incl coin) out from the bank......cr bank, dr cash....goes in your cash book as just that (its called a contra).

Then you pay out from that cash (coin) to purchase the materials from the supermarket - lets say you buy a box of pens and some stamps (lets ignore VAT for both).
^ is credit cash ^debit ?? >>>>> ^ debit stationery ^debit postage and packaging

So you would have one line with crediting cash say £20 and debit stationery £10 and debit postage £10

Write ALL entries out as T accounts, then write in your cash book.
Then try it with VAT (remember the above types of entries will be VAT inclusive)

Hope that helps



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Joanne  

Fallows Hall Ltd 

Winner - Bookkeeper of the Year 2015, 2016 and 2017

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

 



Senior Member

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Posts: 349
Date:

thanks for reply

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