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(95)-USING CASH BOOK FOR INCOMPLETE RECORDS

Tuesday, February 2, 2010

Using Cash Book for Incomplete Records

The construction of a cash book, largely from bank statements showing receipts and payments of a business during a given period, is often an important feature of incomplete records problems.

Information about cash receipts or payments might be needed to establish:
  • The amount of purchases during a period
  • The amount of credit sales during a period


Other items of receipts or payments might be relevant to establishing:

  • The amount of cash sales
  • The amount of certain expenses in the profit and loss account
  • The amount of drawings by the business proprietors


It might therefore be helpful, if a business does not keep a cash book day to day, to construct a cash book at the end of an accounting period. A business which typically might not keep a day to day cash book is a shop, where:

  • Many sales, if not all sales, are cash sales
  • Some payments are made in notes and coins out of the till rather than by payment out of the business bank account by cheque.

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