Specialised Journals - Cash Business

As discussed previously at the end of the general journal tutorial, a business effectively works within several journals depending on the business type. The business type is defined within two distinct categories:

• Primarily cash business, or
• Primarily credit business.

This tutorial focuses on the cash business where a three journal approach is often used, being:

• General Journal,
• Cash Receipts Journal, and
• Cash Payments Journal.

Cash Defined

Cash is viewed as any of the following:

• Notes and coins,
• Cheques,
• Credit/Debit card sales vouchers (manual processing),
• Internet banking (Electronic Funds Transfer (EFT), BPay, etc), and
• Electronic Funds Transfer at Point Of Sale (EFTPOS).

Using the above definitions for cash, this simplifies the accounting process to two primary journals, being:

• Cash Receipts Journal, and
• Cash Payments Journal.

Cash revenue would be recorded in the cash receipts journal, and cash expenses would be recorded in the cash payments journal. The journals are not fixed, in that you can design them yourself or write them up as best suits your business structure. For example, a business that provides primarily a service with little else would only require a few columns, such as; date, receipt, particulars, service fee amount, other, GST and bank. A handyman may expand their dollar columns to specific tasks so they can view what earns them more money and what maybe they could drop as a service, ie. cleaning, painting, plumbing, carpentry, etc. There is no fixed method in maintaining such journals, just that they capture your revenue and expenses made with cash.

Download in PDF format: