The Simple Cash Book – Introduction to Accounting Entries for a Business (Senior 2 Entrepreneurship) | Ganzaa

Introduction to Accounting Entries for a Business

Lessons

Senior 2 · Entrepreneurship

Introduction to Accounting Entries for a Business

5 lessons

Lesson 5 of 5

The Simple Cash Book

20 min

Why this matters

Cash is where small businesses most often lose track, and where theft and mistakes hide. A cash book tells the owner, at any moment, how much cash there should be in the drawer. If the count does not match, something is wrong and can be found the same day.

What a cash book is

A cash book records all money received and paid out in cash. It is both a book of prime entry (transactions are written there first, from receipts and payment vouchers) and the cash account in the ledger. A simple (single-column) cash book has one money column on each side:

Debit side (left): money received: opening balance, cash sales, cash from debtors, loans received in cash.
Credit side (right): money paid: purchases for cash, rent, wages, transport, payments to creditors.

Larger businesses use a two-column cash book, with a cash column and a bank column on each side. The cash balance can never be a credit balance, because you cannot pay out more cash than you have.

Worked example: Mutesi's tailoring shop

Written by Ganzaa. Mutesi's cash transactions for the first week of September 2026:

1 Sept: cash in the drawer at the start, 45,000 Frw.
2 Sept: cash sales 38,000 Frw; bought thread and buttons 12,000 Frw.
3 Sept: paid rent 40,000 Frw.
4 Sept: cash sales 52,000 Frw; paid transport 3,000 Frw.
5 Sept: Niyonzima paid the 20,000 Frw he owed; bought fabric 35,000 Frw.
6 Sept: bought electricity tokens 8,000 Frw.

Cash book

Debit (Dr)			Credit (Cr)
Date	Details	Frw	Date	Details	Frw
1 Sept	Balance b/d	45,000	2 Sept	Thread and buttons	12,000
2 Sept	Sales	38,000	3 Sept	Rent	40,000
4 Sept	Sales	52,000	4 Sept	Transport	3,000
5 Sept	Niyonzima	20,000	5 Sept	Fabric	35,000
			6 Sept	Electricity	8,000
			6 Sept	Balance c/d	57,000
	Total	155,000		Total	155,000
7 Sept	Balance b/d	57,000

Total of the debit side = 45,000 + 38,000 + 52,000 + 20,000 = 155,000 Frw.
Total paid = 12,000 + 40,000 + 3,000 + 35,000 + 8,000 = 98,000 Frw.
Balance = 155,000 − 98,000 = 57,000 Frw, entered as balance c/d on the credit side so both sides total 155,000.
The balance is brought down (b/d) on the debit side on 7 Sept: Mutesi should have 57,000 Frw in the drawer. If she counts less, cash is missing.

Tip

Memory hook. Cash IN on the LEFT, cash OUT on the RIGHT. To balance: add both sides, put the difference on the smaller side as c/d, rule off with equal totals, and bring the balance down on the opposite side.

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Practice

On which side of the cash book is each entered? (a) cash sales; (b) wages paid; (c) cash received from a debtor; (d) goods bought for cash.

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Solution: (a) debit; (b) credit; (c) debit; (d) credit.

A cash book opens with 20,000 Frw. Receipts are 65,000 Frw and payments 58,000 Frw. What is the closing balance?

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Solution: 20,000 + 65,000 − 58,000 = 27,000 Frw (debit balance).

Why can the cash column of a cash book never have a credit balance?

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Solution: A credit balance would mean more cash was paid out than there was, which is impossible for physical cash. (A bank account can be overdrawn, so a bank column can.)

Mutesi's cash book shows a balance of 57,000 Frw but she counts 52,000 Frw. What should she do?

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Solution: Look for an unrecorded payment or an error in her entries, check her receipts and vouchers, and investigate a possible loss of 5,000 Frw.

Summary

The cash book records all cash received (debit side) and paid (credit side); it is both a book of prime entry and the cash account.
Balance it by putting the difference on the smaller side as c/d and bringing it down as b/d.
The cash balance is always a debit balance; comparing it with a physical cash count reveals errors and losses.

Sources and credits

Cash book: Wikipedia contributors, Wikipedia, CC BY-SA 4.0, adapted by Ganzaa.

Mutesi's cash book and the practice items are written by Ganzaa.

This lesson adapts CC BY-SA material and is shared under CC BY-SA 4.0.

1Why this matters

2What a cash book is

Worked example: Mutesi's tailoring shop

Practice

Why this matters

What a cash book is