Cash is the liquid form of asset, and thus it must be carefully managed, as there is always a change of its misappropriation. It is, therefore, necessary for keeping proper control over cash. Since the new government accounting system has cash basis recording, it emphasizes banking transactions, i.e., almost all of the government transactions must take place through the bank. All the cash receipts are through bank deposits and payments are made through bank cheques. A systematic record of all cash receipts and payments is necessary for maintaining control over cash and bank balances in the government offices. For this purpose, a self-balancing form coded AGF No 5 is prepared on daily basis with the help of journal vouchers, which is called the bank cash book.
Meaning of Bank Cash Book
A Bank cash book is a statement, which is prepared to record all receipts and payments of cash and bank transactions. It can be compared with the cashbook maintained in business concerns. Although it is called a book, it is a self-balancing form having mainly columns of cash receipts and payments, bank transactions, and transactions relating to advances allowed and settled. Besides, it also contains budget expenditure and miscellaneous columns. It is prepared by operating level government offices for recording their cash as well as bank transactions. Thus, it contains five accounts such as cash account, bank account, budget expenditure account, advance account, and miscellaneous account. Each account is divided into debit and credit columns. Since it contains a number of columns, it is also called a multi-column cashbook. It is prepared on the basis of a journal voucher.
Objectives of Bank Cash Book
A Bank cash book is an important financial statement, which shows the cash and bank balances of government offices. The main objectives of the bank cashbook are as follows:
- To make a systematic and permanent record of all cash and banking transactions.
- To effectively control over cash and banking transactions.
- To show the position of cash account, bank account, budget expenditure account, advance, and miscellaneous account.
- To show the bank position of cash account, bank account, budget expenditure account, advance, and miscellaneous account.
- To show the bank balance of the office at any point in time.
- To supply necessary and reliable information and data for preparing monthly statements and other financial reports.
- To check the completion of the double effect of each transaction.
- To estimate the amount of cash requirement and disbursement.