Advantages of a Cash Book

The advantages of a cash book are:
  • Reliable and proven method of recording all financial transactions

  • It can save a lot of money by allowing you to do quite a bit of the work – work that normally your accountant would do

  • If you have to pay GST (or VAT or Sales Tax) the cash book can be set up in such a way that the GST (or VAT or Sales Tax etc) amounts are easily identified in their own column and easily accounted for, to the Tax Department.

  • Possible to see how the business is going on a month to month basis by looking through the cash book and analysing the breakdown of income and expenses

The disadvantages of a cash book are:
  • If your GST (or VAT or Sales Tax etc) is on an invoice basis, it is possible to calculate the GST (or VAT or Sales Tax etc) from the cash book alone.

  • The writing up of a manual cash book is slightly outdated because of the use of computerised software. Sometimes writing up an offline or non computerised cashbook is not as cost effective but this depends on the type of business and its size.

  • It can take a lot of time to start and maintain. If the business is large then it is a cost that should be taken into account.

  • For the cash book to really be of use it needs to be transferred into financial statements which are the only reports that can show how the business is going and this involves extra time.

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