What is a cash book?

By Book Keeping Pros
Sources checked 15 Oct 2026

Definition

A cash book is a record of all the money a business receives and pays out, whether by cash, card, cheque or bank transfer, kept in date order. It shows the business's own view of its bank and cash balances, which a bank reconciliation then checks against the bank statements.

In a manual system, the cash book is a ruled book or a spreadsheet with columns for money received and money paid. In accounting software, the bank account register plays the same part: each bank transaction entered or imported is a cash book entry. A manual book often has separate columns for cash and bank, so both balances can be followed in one place, and some layouts add a column for discounts given to customers or received from suppliers.

Each entry should be backed by the business's own documents, such as receipts and invoices. That evidence, not the way the entry was made, is what lets the cash book be checked against the bank statement. Every entry also needs an account, such as sales, rent or a particular supplier, which is how the cash book feeds the general ledger. In a manual system, its column totals are usually posted to the ledger at the end of each month.

A cash book shows money movements, not everything the business owes or is owed. A sale on credit does not appear until the customer pays, and a supplier bill does not appear until it is paid. On its own, then, a cash book cannot show debtors, creditors or profit measured on an accrual basis, which is why a business that invoices customers or buys on account also keeps sales and purchase records alongside it.

In Australia

business.gov.au defines a bank reconciliation as a cross-check that the amounts in your cash book match the relevant bank statements.

It also says that if you use a single account for both personal and business banking, you must clearly identify any personal payments or expenses in your cash book.

Its glossary describes a cash book as a daily record of the cash, credit and cheque transactions a business receives and pays out. It counts as cash anything available on demand, from notes, coins and petty cash to certain cheques and balances held in savings or debit accounts, and describes petty cash as money held for minor, miscellaneous costs like postage.

Worked example

Illustrative example: the first week of July in a cash book
Date	Details	Received (AUD)	Paid (AUD)	Balance (AUD)
1 Jul 2026	Opening balance			2,000.00
3 Jul 2026	Customer payment, invoice 104	880.00		2,880.00
5 Jul 2026	Rent		1,200.00	1,680.00
7 Jul 2026	Office supplies		95.50	1,584.50

Illustrative example only: these rows show the method and are not sourced data.

Common mistakes

Copying bank transactions into the cash book without checking them against receipts, invoices and other supporting records.
Leaving out small cash purchases because they seem too minor to record.
Treating money moved from the business's savings account to its everyday account as a sale.
Letting the cash book fall weeks behind, so its balance is out of date when decisions are made.
Mixing personal and business payments from a shared account without marking which are which.

Common questions

Is a cash book a journal or a ledger?

In a manual system it is both. It is a book of original entry, because receipts and payments are written in it first, straight from receipts, invoices and bank records. It also stands in for the cash and bank accounts in the ledger, since its running balance is the balance of those accounts. In accounting software the line mostly disappears: recording a bank transaction enters it and posts it to the ledger in one step.

What is the difference between a cash book and a petty cash book?

A cash book records all the money the business receives and pays, most of it through the bank. A petty cash book records only the small float of notes and coins kept for minor costs, such as parking or stamps. Petty cash is often run as a fixed float: each purchase is recorded with its docket, and the float is topped up from the bank by the amount spent, which appears in the main cash book as one payment.

How do you work out the cash book balance?

Take the opening balance, add every amount received in the period and take away every amount paid. The result is the closing balance, which becomes the opening balance for the next period. It will often differ from the bank statement balance on the same day because of uncleared items or bank fees not yet entered, so the two are compared through a bank reconciliation rather than expected to agree. A negative bank balance in the cash book means the account is overdrawn in the business's records.

What is the difference between a cash book and a cash flow statement?

A cash book is the detailed record: every receipt and payment, one line at a time, in date order. A cash flow statement is a summary built from records like it, grouping a period's money in and out into totals, such as sales receipts, rent and purchases, to show how the balance changed. A forecast version can also look ahead with estimates, which a cash book does not do.

Related terms

Related service

Bank reconciliations

Each bank, card and loan account reconciled to its statement.

More about bank reconciliations

Sources

Key financial terms
business.gov.au, Australian Government. Current at 15 October 2026, released 9 July 2024. Checked 15 October 2026.
© Commonwealth of Australia 2020, licensed under CC BY 3.0 AU. Licence: CC BY 3.0 AU.
Set up your business bank account
business.gov.au, Australian Government. Current at 15 October 2026, released 11 July 2024. Checked 15 October 2026.
© Commonwealth of Australia 2020, licensed under CC BY 3.0 AU. Licence: CC BY 3.0 AU.