1. There are three books of accounts needed for adequate financial control:
The
cash book
The sales ledger
The purchase ledger
2. You will also require a wages book if you employ staff.
3. The cash book layout should have a number of columns across the page.
4. There should be at least a “sales” column and an “other” column on the receipts page.
5. It is typical for receipts to be recorded on the left-hand page and payments on the right.
6. If the sales and purchase ledgers include VAT then do not record VAT again in the cash book for the same transaction.
7. Do not analyse receipts and payments individually in the cash book if they have already been analysed in the sales and purchase ledgers.
8. When a cheque is received or issued the total amount should be entered in the column headed bank on the relevant page.
9. Payments made by standing order or direct debit should also be recorded.
10. At the end of the month all the columns should be added up.
11. The cash book should be compared with your bank statement to make sure they match.
12. The cash book should exactly represent every movement on the bank account.
13. It is important to monitor the timing of payments so as not to go over the overdraft limit with the bank.
Do’s and Don'ts
Do's:
The layout should have a number of columns.
Do include payments by cheque, standing order and direct debit.
All columns should be totalled at the end of each month.
The cash book should be compared with your bank statement.
The cash book should represent every movement on the bank statement
Don'ts:
Do not record VAT again if the sales and purchase ledgers already have it included.
Do not analyse receipts and payments individually.
Do not go over the overdraft limit set by the bank.
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