Importance of cash book
cash book is discussed below:
book is maintained, it is not necessary to open a separate cash account in the
ledger. Thus, cash book serves the purpose of a journal and a ledger.
transactions are recorded through journal entries, a lot of time and labour
will be involved. To avoid this, all cash transactions are straightaway
recorded in the cash book,
which saves time and labour.
It helps to
know the cash and bank balance at any point of time by comparing the total cash
receipts and cash payments.
As cash book is a separate subsidiary book, an
independent person can maintain it. Hence, business can get the benefit of
division of labour.
provides all information regarding total receipts and payments of the business
concern during a particular period. It helps in formulating effective policy
for cash management.
per cash book and the balance in the cash box can be compared daily. If there
is any deficit or surplus, it can be found easily. It helps in preventing any
fraud or error in cash dealings.