Question 4

The cash book is provided as a subsidiary to the general ledger where all cash transactions made
during the accounting period are recorded in chronological order. The main goal of a cash book is to
manage cash efficiently, making it easy to determine cash balances at any time, allowing school
managers to estimate their cash effectively. It is also faster to access cash information in the cash
book than it is to keep track of cash through a ledger.

The cash book is divided into two parts namely the cash withdrawal journal, which records all cash
payments, and the cash receipts journal, which records all cash received. The cash withdrawal journal
will include items such as payments made to vendors to reduce accounts payable, and the cash
receipts journal will include items such as payments.

The Cash Book is a very important document. If the Cash Book fails to be updated, PGB (Principal
and Headmaster) will not be able to know the current financial position, financial position of the
school, collections received, receipts and payments and control system. Misuse of money can easily
happen if the Cash Book is not updated all the time. The PGB must ensure that the financial
statements in the bank match the balance of the money in the cash book. In accordance with financial
regulations, PGB must ensure that all cash collections are accounted for in the cash book and
deposited in the bank. This rule is important in terms of internal control to ensure that all collections
are properly and properly accounted for. Unbanked money is divided into two categories, the first
category is the collection that has been received and issued student receipts but not submitted to the
office to be recorded in the Cash Book and deposited in the bank.

The second category is the collection that has been submitted to the office and issued an office
receipt and recorded in the Cash Book but has not been deposited in the bank. This is due to lack of
supervision by the responsible PGB. This situation can give way to the misuse of school collection
money. Therefore, PGB must make close supervision to ensure that all collections are accounted for
and banked on time. The school is responsible for collecting, keeping safe and accounting for all
receipts of school money accurately in accordance with procedures. Ensure that all expenditures
incurred from school funds are authentic, accurate, orderly, and valid and supported by complete
supporting documents. Respond to Audit reports and inquiries promptly, if not later than 1 month from
the date the report or inquiry is addressed to the school. Prepare and submit all documents and
financial records for audit, provide the necessary information or clarification, authorize and cooperate
on the audit or inspection.

The importance of cash book is as follows −

 Matching − Actual cash in hand and cash book balance are verified, so errors and recording
mistakes are minimized.
  Maintains daily record − Transactions (cash receipts and cash payments) are recorded on a
daily basis.

 Easy determination − Transactions made on a particular date are easily determined.

 Default identification − Payment failure or cash evasion are identified easily by verifying the
cash book balance with actual cash balance.

 Cash in hand − Gives remaining amount or cash in hand of an organization.

 Time saving − Not only time, it saves expense and efforts in preparing separate books.

 Detection of error is easy.

 Business cash receipts and payments are known easily.

 Accurate accounts related to cash transactions can be maintained.

 It also shows idle money in business.

 Consequences of cash transactions can be known.

Maintain cash books and keep school accounts and financial records properly organized and up to
date. Maintain and keep school accounts and financial records properly organized and up to date.
Avoid any cases of misappropriation or misuse of school funds. Prepare annual financial statements
for the year ended 31 December of each year in accordance with generally accepted accounting
principles and submit them no later than 31 March of the following year.