Cash book: regulations, example and practical advice

The cash bookkeeping must be correct so that it can withstand an audit by the tax office. If an auditor finds errors in the cash book and rejects it as "improper", this can have dire consequences. The article provides the most important information about the cash book.

Barges create a lot of work. An electronic cash book, which simplifies the recording obligations, is useful.

What belongs in a cash book?

Cash receipts and cash expenditures are recorded in a cash book. Every single business transaction that is disputed with cash must be entered. This also includes private income and private expenditure. Important: Not only coins and banknotes are considered cash, but also checks.

From an accounting point of view, the cash book is an auxiliary book for bookkeeping.

Regulations: Tax Code and Commercial Code

Section 145 (1) of the Tax Code (AO) stipulates the following:

“The bookkeeping must be such that it can provide an expert third party with an overview of the business transactions and the situation of the company within a reasonable period of time. The business transactions must be traceable in their development and processing. "

From this regulation it can be deduced that a chronological recording in the cash book is necessary and that it must also be clear which costs and sales were made through the cash register. This principle is also called the "principle of clarity and clarity". There are a few other principles that apply to cash accounting.

the Principles of proper accounting, which are also abbreviated with the designation GoB, represent the generally applicable bookkeeping regulations in Germany. They summarize the quintessence of legal requirements such as the commercial code, tax laws and practice. That HGB delivers from § 238 ff. the most important principles, some of which also apply to cash accounting. First and foremost, the GoB mean for the cash book that the aspects of completeness, correctness, clarity, clarity and verifiability must be given. This has the following consequences for the cash book:

  • No booking without receipt!
  • Every business transaction must be given a date.
  • Each receipt needs a clear receipt number. This can be an invoice number, for example.
  • For the sake of completeness, a clear description must be given. For example, office supplies could be in the text field, but specific information is also possible, for example pens, notebooks, etc.
  • The cash book entry must be completed with an exact amount and the currency. It must also be clear whether it is a deposit or a withdrawal.
  • The sales tax rate must be indicated. In addition, the costs for companies entitled to input tax deduction should be entered as an absolute number (gross) and as a net amount. Small businesses are exempt from VAT on application  and show the amounts without the VAT differentiation.
  • A rolling balance must be recorded at the end of a day.

Example of a cash book (with details of the tax rates)

The cash journal starts with the opening balance. The expenses are continuously deducted from this initial balance and the income is added. The balance cannot be determined for every entry. It is sufficient if the balance is entered at the end of the day.

No.:datecontentsVAT ratenetcontentsVAT ratenetGross
         INITIAL STOCK        100,00 €
101.10.20ink pen16%10 €11,60 €   88,40 €
202.10.20Sale shell   16%50 €58 €  
302.10.20fruit5%12 €12,60 €   133,80 €
Anyone who is entitled to deduct input tax must also state the taxes in the cash book.

Excel spreadsheet tool

An Excel spreadsheet is helpful to familiarize yourself with a cash book. These are already available for download in a simplified form. Ready-made Excel documents are well suited to understanding the relationships, because they take over the arithmetic operations and automatically show the daily balance. For exercise or for operational use, a Cash book template downloaded. However, it is important to know that Excel spreadsheets do not conform to the principles of proper bookkeeping. The reason is that Excel documents can be changed. The individual business transactions can be deleted and subsequently changed. For this reason, Excel tables may only be used for internal purposes. In real bookkeeping, certified programs are to be used, which record the individual booking records in a timely and unchangeable manner.

Thermal paper: when the writing fades

The principles of proper bookkeeping stipulate that bookkeeping must be traceable. This only works if the receipts are legible. Thermal paper, for example receipts from petrol stations or supermarkets, should in principle be viewed critically because the color fades after a while. The tax authorities will not accept illegible receipts. To solve this problem, it is advisable to copy the original thermal receipts and then staple them to the copy and provide them with the corresponding receipt number. Thermal paper dealers provide unusual tips on how to restore faded thermal receipts to let.

However, since 2015 entrepreneurs have been obliged to digitize receipts. The receipts are saved accordingly so that they can no longer be changed afterwards. As soon as receipts are submitted, be it to suppliers, customers or the tax office, they may not be changed any further. If a change is required afterwards, for example because an invoice contains an incorrect invoice address, the original must be copied, clearly identifiable and stored in a traceable manner.

Which date should be entered in the cash book?

It sounds simple, but in practice questions are raised: What date should be entered if a receipt is submitted late? Assume that the cash journal for September is ready and the accounting records are fixed. In mid-October, an employee submitted a fuel receipt that he had forgotten in his wallet. The date on the fuel receipt is September 10, 2020. What is the procedure now, which date applies?

The answer is amazingly simple. The date on which the receipt is submitted must always be entered. It can therefore differ from the date on the receipt. However, it is essential that the receipt is clearly identified so that there is no double charge. The receipt number on the receipt must match the receipt number in the cash book. However, a late submission should not be the rule, because the entry must be made promptly and that basically means that more than ten days may pass.

pictures of Alexas_Photos on Pixabay and Markus Winkler on Pixabay (CCO Creative Commons)