Cash Disbursement Journal

We should all probably keep some sort of a cash disbursement journal, so at the end of the month we aren’t left wondering, “Where did all my cash go?” It would be nice to remind ourselves that we, uh...disbursed all our cash at the track. Still bitter at Wins By A Nose for losing by a tail.

Businesses keep an official cash disbursement journal for this exact reason—they need to record all cash outflows. This could be for purchases made in cash (or more likely by check), accounts payable, and other operating expenses. The journal would be categorized for the various expenses and include any discounts received.

Some companies combine the cash disbursement journal with the cash receipts journal, and call it the “cash book.” Since the journal includes a check number, it can also serve as a check register. In a snapshot, the company can see what percentage is spent on raw materials, for example, as compared to equipment and supplies.

At least once a month the bookkeepers will post the cash disbursements to the general ledger, which records all accounting information for the company. This would include wages and salaries, depreciation, accounts receivable, etc. Fortunately, there are numerous software programs to record all cash disbursements and tie it to the general ledger, so rarely is anyone sitting there calculating it all by hand.

Hopefully this has put you in the mood to go and balance your checkbook.