Bank Cash Book, its Objectives and Importance

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. The bank cash book is based on the principle of the double-entry system. It keeps the record of every financial transaction affecting its debit and credit account. It is closed at the end of each month. A trial balance is prepared to ascertain 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:

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

Importance of Bank Cash Book

Bank cash book is an important book to be maintained by operating level government offices. It is necessary to safeguard and control over cash in an effective manner. The main importance and advantages of bank cash book for government offices are as follows: -

• It helps for estimating cash requirement and disbursement.
• It keeps the systematic record of all cash and banking transactions of a government office in complete form.
• It helps for effective safeguarding and controlling over cash and banking transactions.
• It helps for making audit book of accounts.
• It shows the amount of uncleared advance.
• It shows the bank balance of the government office at any given point of time.
• It shows the position of cash account, bank account, budget expenditure account, advance account and miscellaneous account at a time.
• It provides complete financial data and information, which help for preparing financial statements and reports.

Considerations for Preparing Bank Cash Book

Bank cash book is an important financial statement of government office. It should be prepared systematically by following the principles of double entry system of book-keeping. The effect of one financial transaction is made on debit side one account and credit side of another account. While preparing the bank cash book, the following points should be considered carefully:

• The bank cash book should be prepared after preparing the journal voucher.
• The transactions relating to cash receipts and payments should be posted to the cash account.
• The account debited in the journal voucher should be debited in the bank cash book and the accounts credited in the journal voucher should be credited in the bank cash book.
• The transactions relating to advance given should be posted in three accounts of the bank cash book, which are the bank account, budget expenditure account and advance account.
• The transactions relating to advance cleared should be posted twice in the budget expenditure account. The amount of real expenditure should be shown outside the bracket and the amount of advance cleared should be shown inside the bracket.
• The transactions relating to inter-head budget transfer, security deposit and other transactions are not posted in the bank cash book, as they do not affect the cash and bank balances.
• The item of the transactions does not fall under cash, bank, budget expenditure and advance accounts, is recorded in a miscellaneous account.
• The transactions affect two accounts in the bank cash book as per the rule of double entry.

Things to remember

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

• It includes every relationship which established among the people.
• There can be more than one community in a society. Community smaller than society.
• It is a network of social relationships which cannot see or touched.
• common interests and common objectives are not necessary for society.

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