Using a Cash Disbursements Journal

 

A Cash Disbursements Journal is simply a listing of all your cash payments for a specified period of time, say a month.

It’s a part of basic accounting, a book of original entry to capture your cash transactions.

If you’re using an accounting software package like QuickBooks, the computer automatically prepares a cash disbursements journal based on the checks you write thru the software.

But if you’re using a simple manual accounting system, it’s really not that hard to do it yourself. In a manual system, your cash disbursements journal is your record of expenses for that month (or quarter or year). This can be handed off to your accountant to use in preparing your income statement. Or you could prepare an income statement yourself.

Let’s take an example. All you need is Microsoft Excel, which is what I used in the example below, or you can use a simple pad of 13-column accounting paper.

Let’s move right into an example.

Cash Disbursements Journal example.

cash disbursements journal, accounting journals

This cash disbursements journal was made in Excel, but it could easily have been made using the 13-column accounting paper. If you are just opening a small business you want to keep things simple and inexpensive.

The information we’re trying to capture in this accounting journal is the date, amount, and purpose of each cash disbursement, be it a check or an ACH transaction thru your bank.

In the example above I’ve got a column for the check number, date, name and description, and amount. Then there are columns for expenses you use frequently, like supplies, rent, utilities, etc.

Then at the end of a month, or if your small business is really small, maybe a quarter or a year, you will total all the columns. See the above example. These totals will become your expenses for the month on your Income Statement.

Let’s take it up a notch, and add some more information.

Let’s assume we’re opening a small business, let’s call it Sallie’s Corporate Gift Basket Supply.

We’ve started a simple manual cash disbursements journal like the one above, but we want a little more information on our disbursements. We’re making gift baskets, so we want to add a column for “materials”. And, we want to know which job we’re purchasing materials for.

Let’s see what that would look like…

accounting journals

This example is just like the first example, but look at the right hand side. We’ve added 2 columns, one for the amount of materials purchased, and one for the appropriate job number. If one purchase is for more than one job, we’ve split it up.

This way, at the end of a month we can add up the materials by job number, and know how much we’ve spent on each job.

As you can see, accounting journals can be very helpful by giving us the information we need in one convenient place.

However, this does take a bit of time.  And if you’re trying to market your business, service clients, and keep the books too, it may make sense for you to outsource your accounting.

If you need help setting up a small business accounting system, give me a call.  I provide bookkeeping, payroll, and accounting consulting services.  Check out my home page for more information on the services I provide.

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