Building a Daily Cashbook for Cash Bank and Wallet

Record money movements by account and calculate balances without treating transfers as new sales.

Part 3 of 10 | Bookkeeping for Small Businesses

Learning goals

You will construct a cashbook, calculate a running balance and record a transfer between your own money locations. You will distinguish the date money moves from the date a sale or purchase was recognised in a separate record.

Before you begin

Allow 60 minutes with a ruler, notebook and calculator. A spreadsheet is optional, but all work can be completed on paper. Use three labelled accounts: cash box, business bank and business wallet. The figures below are invented; no payment or bank connection is needed.

Choose a clear layout

For each account, use columns for date, reference, description, category, money in, money out and running balance. Begin with the checked opening balance. Write one event per row and show the currency consistently. If you use separate pages, name the account on every page so a wallet entry is not confused with physical cash.

The running balance is the previous balance plus money in minus money out. For a spreadsheet, test a few rows manually before trusting the formula. Do not insert a category total into the running-balance calculation as though it were another transaction. A summary adds information; it does not move money again.

Enter cash activity in order

Start the practice cash box at GMD 1,000. Receive GMD 600 from completed cash sales, bringing cash to GMD 1,600. Pay GMD 120 for a completed delivery service, leaving GMD 1,480. Then deposit GMD 400 from the cash box into the business wallet, leaving physical cash of GMD 1,080.

The GMD 400 entry needs the category transfer to own wallet. It is neither another delivery expense nor an owner withdrawal. In the wallet book, record the matching GMD 400 inflow with the same transfer reference. If the wallet started at GMD 200 and no fee applies in this fictional case, it ends at GMD 600.

Check the combined position

Combined opening money was GMD 1,200: cash 1,000 plus wallet 200. Combined closing money is GMD 1,680: cash 1,080 plus wallet 600. The increase is GMD 480, explained by GMD 600 from sales less GMD 120 paid for delivery. Moving the GMD 400 between accounts did not change the combined amount.

If a real transfer incurs a charge, record the actual fee separately from the transferred principal. Never record both a fee-inclusive debit and the same fee again as another cashbook outflow. Describe the convention clearly. In this course, each money-out entry represents the actual debit, with a separate breakdown if the principal and fee need different categories.

Include movements that are not trading expenses

Owner contributions, withdrawals, loan receipts and repayments belong in the cashbook because money moves. Their categories distinguish them from sales and ordinary expenses. Equipment purchases also move money even when the equipment should be tracked as an asset rather than charged entirely to the current management period.

Credit sales do not enter the money-in column before collection. Record them in a customer account until payment arrives. When the customer pays, enter the receipt as collection of that invoice. Similarly, paying a supplier's earlier bill is settlement of an existing amount owed, not automatically a new purchase on the payment date.

Close the day without forcing a match

Count the actual cash at a safe time and compare it with the calculated cash balance. Check wallet and bank activity through their official account records. If an entry is pending, keep its status visible and establish whether it is included in the account's displayed balance. Do not assume every balance screen uses the same treatment.

A difference needs investigation. Check arithmetic, missing entries, duplicate rows and mixed personal spending. Record unresolved differences with a date and next action. Avoid a made-up balancing sale or expense. Cash that appears to be missing may be an error, an unrecorded event or something requiring a separate investigation.

Guided exercise

1. Draw separate cash and wallet books with all seven columns. Enter openings of GMD 1,000 and GMD 200.

2. Post the GMD 600 sale, GMD 120 delivery payment and GMD 400 transfer. Carry the transfer reference into both books.

3. Calculate each running balance and the combined closing balance. Explain why the transfer cancels when looking at total business money.

4. Add a fictional customer invoice for GMD 300 that remains unpaid. Show where you would track it without putting it into today's money-in column.

5. Suppose the physical count is GMD 1,060 rather than the expected balance. Record the difference and write three checks you would make before deciding its cause.

Knowledge check

1. What are the expected closing cash and wallet balances?

2. Is depositing cash into your own wallet a new sale?

3. How large is the cash-count difference in the exercise?

Answer guide

1. Cash GMD 1,080 and wallet GMD 600, totalling GMD 1,680.

2. No. It changes where existing money is held.

3. GMD 20 short compared with the calculated cash balance. The cause is not yet known.

Completion standard

Produce both correct cashbooks, link the transfer, keep the unpaid invoice out of money received and document the GMD 20 difference honestly. Be able to explain every running balance without relying only on a spreadsheet formula.

Sources and verification notes

Original bookkeeping explanations and fictional worked examples. Simplified management records do not establish statutory accounts or tax treatment.