Preparation of Cash Book - JSS2 Business studies Lesson Note

Opening Balance:

The cash book begins with the opening balance of cash and bank balances from the previous period.

Recording Transactions:

Every cash receipt and payment is recorded in the appropriate column of the cash book, along with relevant details such as date, description, and amount.

Balancing:

At the end of the accounting period, the total of both the cash and bank columns is calculated. The difference between the total receipts and total payments represents the closing balance.

Posting to Ledger:

The entries from the cash book are posted to the respective accounts in the general ledger, ensuring that the financial records are accurately maintained and updated.

Reconciliation:

Finally, the cash book balances are reconciled with the bank statements to identify any discrepancies and ensure the accuracy of the recorded transactions.

By following these steps, the cash book provides a comprehensive overview of an entity's cash and bank transactions, enabling effective financial management and decision-making.