Analysed Cash Book

Many stationers sell blank cash books with multiple columns for recording cash amounts. Generally businesses are advised by their accountant how to set up a system using such a book. Typically on an opened double page, income is at the left and expenditure is at the right. The first two columns are for gross cash and bank transactions. The third column is for VAT (if any) and the remaining columns provide a basic analysis.

For income, principal analysis columns would be sales or takings, capital introduced and bank interest (there is usually plenty of space on the income side). For expenditure, principal analysis columns would be purchases of goods or business stock for resale, wages, premises and sundry expenditure, but you may have as many columns as space permits.

Every transaction is entered twice, once as a cash or bank entry and once as VAT (if any) and analysed amount. Generally the system starts with one page to a month, and at the end of each month everything is added up and cross-checked or cross-cast so any arithmetic errors can be detected.

This is a good system and one which accountants often recommend. However, speaking from experience many businesses may wane in enthusiasm for using this system as the years go by.

By its nature, this system is pitched at cash accounting for VAT.