I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

PART C: THE USE OF DOUBLE-ENTRY AND ACCOUNTING SYSTEMS 

 

52

 

One side (the left) of the cash book is used to record receipts of cash, and the other side (the right) is 

used to record payments. The best way to see how the cash book works is to follow through an 

example. For convenience, we are showing the cash receipts and cash payments sides separately, but 

they are part of the same book. 

The 

cash book

 is the book of prime entry for cash receipts and payments. 

 

4.2 Example: cash book 

At the beginning of 1 September, Robin Plenty had $900 in the bank. 

During 1 September 20X7, Robin Plenty had the following receipts and payments. 

(a) 

Cash sale: receipt of $80 

(b) 

Payment from credit customer Hay $380 

(c) 

Payment from credit customer Been $720 

(d) 

Payment from credit customer Seed $140 

(e) 

Cheque received from Len Dinger $1,800 to provide a short-term loan 

(f) 

Second cash sale: receipt of $150 

(g) 

Cash received for sale of machine $200 

(h) 

Payment to supplier Kew $120 

(i) 

Payment to supplier Hare $310 

(j) 

Payment of telephone bill $400 

(k) 

Payment of gas bill $280 

(l) 

$100 in cash withdrawn from bank for petty cash 

(m)  Payment of $1,500 to Hess for new plant and machinery 

If you look through these transactions, you will see that seven of them are receipts and six of them  

are payments. 

The receipts part of the cash book for 1 September would look like this. 

CASH BOOK (RECEIPTS) 

 

Date 

 

Narrative 

 

Total 

 

 

 

 

 

$      

 

1 Sep 20X7 

 

Balance b/d* 

 

 

900 

 

 

Cash sale 

 

 

80 

 

 

Accounts receivable: Hay 

 

 

380 

 

 

Accounts receivable: Been 

 

 

720 

 

 

Accounts receivable: Seed 

 

 

140 

 

 

Loan: Len Dinger 

 

 

1,800 

 

 

Cash sale 

 

 

150 

 

 

Sale of non-current asset 

 

 

   200 

 

 

 

 

4,370 

* 'b/d' = brought down (ie brought forward) 

Notes 

1 

There is a space on the right-hand side of the cash book so that the receipts can be analysed 

under various headings – for example, 'cash from receivables', 'cash sales' and 'other receipts'. 

2 

The cash received in the day amounted to $3,470. Added to the $900 at the start of the day, 

this comes to $4,370. This is not the amount to be carried forward to the next day, because first 

we have to subtract all the payments made during 1 September. 

BPP Tutor Toolkit Copy

---

CHAPTER 4  

//

  SOURCES, RECORDS AND BOOKS OF PRIME ENTRY