Bank Cash Book

Bank cash book is a multi-column ledger prepared by operating level offices of the government of Nepal to maintain the record of cash & banking transaction under AGF No. 5. It is a statement, which keeps the record of cash receipts and payments made through the '/bank. It is a book prepared by operating level offices for recording their banking transactions. It maintains the record of cash receipt and cash payment which are made either in cash or through cheque. It prepared on the basis of journal voucher. It keeps the record of every financial transaction affecting its debit and credit account so it is based on principle of double entry system. It is closed at the end of each month. A trial balance checks that whether the posting made in the bank cash book is correct or not.

Objectives of Bank Cash Book

The main objectives of bank cash book are as follows:

1. To make systematic and permanent record of all cash and banking transactions.
2. To control over cash and banking transactions effectively.
3. To show the position of cash account, bank account, budget expenditure account, advance account and miscellaneous account.
4. To show the bank balance of the office at any given point of time.
5. To supply necessary and reliable information and data for preparing monthly statements and other financial reports.
6. To prove the completion of the double effect of each transaction.
7. To estimate the amount of cash requirement and disbursement.

Importance of Bank Cash Book

Bank cash book is an important book of government accounting to prepared by operating level officer of the government of Nepal. The main importance and advantages of bank cash book for government offices are as follows: -

1. It helps to check the misuse, misappropriation and embezzlement of cash.
2. It is required to prepare trial balance which helps to check the arithmetical accuracy of finance transaction of the government of Nepal.
3. It helps to safeguard and control cash in the proper way.
4. It makes possible for cross checking with the balance as shown by the bank statement.
5. It reduces the changes of tried and misuse.
6. It shows the amount of expenditure, cash balance, bank balance, and advance given and cleared at any time after each transaction.
7. It provides complete financial data and information, which help for preparing financial statements and reports.

Ruling or Specimen of Bank Cash Book

Bank cash book is a statement, which is prepared being based upon the principles of double entry system. It is prepared under AGF No. 5. It has 17 columns containing cash account, bank account, budget expenditure account, advance account and miscellaneous account. The specimen of bank cash book is as follows:

Accounts involved in Bank Cash Book

Bank cash book contains five accounts as mentioned below:

1. Cash account
   It is the first account of bank cash book which is meant for recording the transactions of cash receipts and payments made in an office. It has two columns i.e. debit & credit. All the cash receipts and cash payments are recorded in debit and credit column respectively.
   
   
2. Bank account
   It is the second account of bank cash book which contains 4 columns. Such columns are debit, credit, cheque no. and balance. All the cash receipt in the bank are debited and all cash payment through are credited. The number mentioned in the cheque is shown in cheque no. The bank balance after each banking transaction is shown in the balance column.
   
   
3. Budget expenditure account
   It is the account of bank cash book. It maintains the record of all the expenditures made by government office under different budget heads and sub-heads. It contains two column i.e. budget number column and amount column. The budget head numbers of different transactions are recorded in budget number column and the amount is written in a second column. The amount of advance given in any budget head is also recorded in this account.
   
   
4. Advance account
   This account of bank cash book contains two columns. Namely, advance given column and advance-cleared column. All the advance given amounts are recorded at advance given column & all advance-cleared amounts are recorded to advance cleared amount.
   
   
5. Miscellaneous account
   It is the last account of bank cash book which contains two columns i.e. debit & credit. It is used to keep the record of the transaction other than cash & banking, expenditure & advance. All the transactions which do not affect cash, bank, budget expenditure and advance accounts are posted as per journal voucher on debit and credit column of the miscellaneous account. Petty cash fund, provident fund, income tax, revolving fund, budget release, a loan given, a loan taken etc. are some of the examples of transactions posted under the miscellaneous account.

Considerations for Preparing Bank Cash Book

The following points are to be considered while preparing a Bank Cash Book:

1. First of all, journal voucher should be passed for each transaction.
2. Only the cash transactions are to be posted into a Bank Cash Book chronologically.
3. Those cash transactions which do not relate to cash, bank, budget expenditure and advance accounts should be posted in the miscellaneous account.
4. Advance transactions should be posted in three accounts like Cash or Bank, Budget Expenditure and Advance Accounts both at the time of advance paid and clearance.
5. The amount of petty cash fund is entered in it only at the time of reimbursement.
6. At the end of each month, the total of each account should be drawn and added to the total up to the previous month.

Closing of Bank Cash Book

Bank cash book should be closed at the end of every month as well as at the end of each fiscal year.

Monthly Closing

All the operating level offices receive their budget from central level offices. Operating level offices receive their budget in the form of revolving fund or monthly budget release. At the end of each month, the operating level offices should submit financial data and information relating to bank balance, total budget expenditure, uncleared amount of advance and total budget release to the concerned central level offices by closing the bank cash book. At the end of each month, all the columns of the bank cash book are added to find out the position of each account. The monthly closing is a process of getting the total of all the amount columns of all the accounts of the bank cash book. In the process of monthly closing, first of all, the total of the month is obtained. Next, the total up to the previous month is brought down. Finally, total up to the current month is obtained by adding the total of the current month to the total up to the previous month for determining the real position of all the accounts till the date. A trial balance is prepared to know the arithmetical accuracy of the posting made in the bank cash book.

Yearly Closing

All the accounts of government offices must be closed at the end of each fiscal year. The main accounts to be closed at the end of the fiscal year are the bank account, total budget expenditure account, petty cash fund account, advance account, interest fund account and total budget release account. The process of closing all the accounts at the close of the fiscal year by passing closing vouchers is called annual closing of the accounts.